26. A broker lists a property at $340,000. The seller agrees to a 5% commission with 60% going to the buyer's broker. The property successfully closes at $350,000. The buyer's broker will receive:
Answer: B
The buyer's broker will receive $10,500.
To calculate the buyer's broker's commission, first determine the total commission on the sale price of $350,000, which is 5% of that amount. This results in a total commission of $17,500, of which 60% will be allocated to the buyer's broker, leading to a total of $10,500.
A) $7,000
This amount is incorrect because it does not reflect the proper calculation of the commission based on the sale price and the agreed percentage. The buyer's broker's commission cannot be $7,000 when the total commission is higher.
B) $10,500
This is the correct answer. The total commission on the sale price of $350,000 is 5%, which equals $17,500. Since the buyer's broker receives 60% of this total commission, the calculation is 0.60 x $17,500, resulting in $10,500.
C) $17,000
This option is incorrect as it overestimates the buyer's broker's share. The commission allocated to the buyer's broker is based on 60% of the total commission, which is significantly less than $17,000.
D) $17,500
This choice reflects the total commission earned on the sale, but it does not represent the amount specifically allocated to the buyer's broker. Only 60% of this figure, which is $10,500, goes to the buyer's broker.
Conclusion
The correct answer is $10,500, as it directly arises from the proper calculation of the commission based on the sale price and the percentage allocated to the buyer's broker. All other options fail to accurately represent the broker's share of the commission, either by underestimating or overestimating the distribution based on the total commission structure.