California Real Estate Practice Exam

A home sold for $150,000 on which the seller was to pay a 6% brokerage fee. Additional costs were: 2% prepayment penalty on an existing loan balance of $102,800, escrow fees of $210, and new loan discount fee of $534. The seller's cost of sale will be what percent of gross equity?

1. 20.5%

2. 228%

3. 23.4%

4. 25%

The correct answer is: 20.5%

To determine the seller's cost of sale as a percentage of gross equity, it's important to first identify all associated costs and then compute the gross equity. The gross sale price of the home is $150,000. To calculate the seller's costs, we need to include the brokerage fee, prepayment penalty, escrow fees, and the new loan discount fee. 1. **Brokerage fee**: This is 6% of the sale price. - Calculation: 0.06 x $150,000 = $9,000 2. **Prepayment penalty**: This is 2% of the outstanding loan balance of $102,800. - Calculation: 0.02 x $102,800 = $2,056 3. **Escrow fees**: This is a fixed cost of $210. 4. **New loan discount fee**: This is another fixed cost of $534. Now, we add all these costs to determine the total cost of sale: - Brokerage fee: $9,000 - Prepayment penalty: $2,056 - Escrow fees: $210 - New loan discount fee: $534 Total costs = $9,000 + $2,