Question

A married couple is purchasing a home for $198,000 and gave the broker a $10,000 earnest money deposit. The buyers will finance the purchase with a new 80% loan-to-value mortgage loan. The closing date is March 18, with the closing day charged to the buyer. Homeowners association dues are $325 monthly and were paid in advance by the seller. Property taxes are $2,416. Prorations should be made using the 365-day method. The sellers will pay the 6% brokerage fee, the documentary stamp tax on the deed, and title insurance of $1,789. The buyers will pay the appropriate state taxes on the note and mortgage, $72 in recording fees, and for a survey costing of $475. How is the brokerage fee handled on the Closing Disclosure? A) $11,880 debit seller, credit buyer; page 2 B) $13,860 debit seller only; page 2 C) $11,880 debit seller only; page 2 D) $11,880 credit seller only; page 3

Answer 1

answer is option C $11,880 debit seller only; page 2

As the buyer paid earnest money deposit to seller, which indicates the a buyer's good faith to buy a home, the brokerage fee is supposed of seller is only supposed to be debited.

Brokerage fee is recorded on page 2 and that only of seller

brokerage fee debit by seller = $198000*6% = $11880

Therefore, option C is the correct answer