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The following formula and example shows a quick way to calculate the break-even price point or sale price required for a specific net on the sale of a property.
The termite letter, deed, brokers fee and sellers half of title insurance are relatively constant. Repair costs and seller contribution to purchaser closing costs are variables but can be estimated for each situation. The formula does not include prorated taxes which will be shared between buyer and seller and based on the sale date in relation to the beginning and ending dates of the tax year.
Purchase price or desired net + $100 (termite inspection) + $100 (deed preparation) + $500 (possible repair costs after a purchaser's home inspection) + $3,000 (possible seller paid closing costs for purchaser) X 1.002 (seller half of title insurance) X 1.06 (standard broker's fee) = Estimated break-even sales price.
Example.
Purchase Price $250,000
Termite inspection $ 100
Deed preparation $ 100
Repairs $ 500
Closing costs $ 3,000
Total $253.700
Sellers title ins. X 1.002
$254,207
Standard brokers
fee X 1.06
Estimated
break even point $269,495
We assume no responsibility for the use of this formula. It is provided as a rough rule of thumb only. An estimated settlement statement should be prepared by a qualified realtor prior to listing a property for sale or endorsing a contract for sale.
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