Humber/Ontario Real Estate Course 4 Exam Practice

For a transaction involving a buyer representation agreement with a rate of 6.0% and a property listed at 5%, what is the total remuneration for the brokerage on a $340,000 sale?

1. $8,500

2. $17,000

3. $20,400

4. $10,200

5. $15,000

6. $18,000

The correct answer is: $20,400

To determine the total remuneration for the brokerage on a $340,000 sale involving a buyer representation agreement at a rate of 6.0% while the property is listed at 5%, you need to consider how commissions are normally structured in real estate transactions. In this scenario, the property is listed for sale at a 5% commission. This means that upon the successful sale of the property, the listing brokerage is entitled to receive 5% of the sale price. The buyer's brokerage, which has a representation agreement with a 6% commission, would typically receive a portion of the overall commission paid to the listing brokerage unless otherwise negotiated. First, calculate the total commission based on the property sale price: - Total commission on a $340,000 sale at 5% is calculated as follows: $$340,000 × 0.05 = $17,000.$$ This $17,000 is the commission that would be shared between the listing and the buyer's broker (if applicable). If the buyer's brokerage is entitled to this commission, they would likely receive the full amount (6% they are entitled to as per the buyer representation agreement does not apply here since it’s based on a percentage of the sale price