12. Sellers want to net $80,000 from the sale of their house. They must pay $50 for deed preparation, $150 for an appraisal fee, 5% of the sales price for brokerage fees, $450 for title insurance, and a mortgage balance of $36,000. What sales price will enable the sellers to net the amount they want?
Answer: D
To net $80,000 from the sale, the sellers need a sales price of $122,800.
To achieve a net of $80,000, the sellers must account for their expenses, which total $42,600. Therefore, the sales price must be set at $122,800 to cover these costs and ensure they net the desired amount.
A) $120,000
Choosing a sales price of $120,000 would result in a net amount significantly lower than the sellers' goal. After deducting the total expenses of $42,600 from this price, they would only net $77,400, which does not meet their requirement of $80,000.
B) $120,700
A sales price of $120,700 similarly fails to meet the sellers' target. With the total costs of $42,600 subtracted, they would net approximately $78,100. This amount is still below the desired net of $80,000, making it an insufficient option.
C) $122,500
While a sales price of $122,500 is closer to the target, it still falls short. After accounting for the expenses of $42,600, the sellers would net about $79,900, which is not enough to achieve their goal of $80,000.
D) $122,800
Setting the sales price at $122,800 allows the sellers to cover all their expenses and achieve their desired net. After deducting the total costs of $42,600, they will net exactly $80,000, fulfilling their requirement perfectly.
Conclusion
Option D is definitively the correct answer as it allows the sellers to net the exact amount they desire after all expenses are accounted for. The other options fail to provide a sufficient net amount, highlighting the importance of accurately calculating all associated costs when determining a sales price.