National Real Estate Exam (PSI)Real Estate CalculationsMedium
A seller wants to net $190,000 after paying a 5% commission. What must the home sell for so the seller nets exactly that amount?
- A$195,000
- B$199,500
- C$200,000
- D$190,950
Show answer & explanationAnswer & explanation
Correct answer: C. $200,000
Since the seller keeps 95% of the sale price after a 5% commission, the sale price is found by dividing the desired net by (1 − commission rate): $190,000 ÷ 0.95 = $200,000.
Why the other options are wrong
- A. This mistakenly adds 5% flat to $190,000 instead of dividing.
- B. This is close but not mathematically accurate for the net formula.
- D. This is too low; it doesn't fully account for the 5% deducted.
Net-to-Seller (Reverse Commission)
To find the required sale price when a seller wants a specific net amount after commission, divide the net amount by (1 − commission rate).
- Sale Price = Net ÷ (1 − Commission Rate)
- Never simply add the commission percentage to the net
- Verify by subtracting commission from resulting sale price
Memory trick: Divide, don't add, to find what the house must sell for.