PSI Virginia Real Estate Practice Exam

What are net proceeds in a property sale?

1. The total sale price before expenses

2. The amount received after costs and expenses

3. The initial buyer deposit

4. The gross revenue from the sale

The correct answer is: The amount received after costs and expenses

Net proceeds in a property sale refer to the amount that the seller actually receives after all costs and expenses related to the sale have been deducted from the total sale price. This includes expenses such as real estate agent commissions, closing costs, taxes, and any other fees incurred in the transaction. Understanding net proceeds is critical for sellers as it helps them assess their financial return from the sale of the property. While the total sale price reflects the buyer's offer before any deductions, net proceeds give a clearer picture of what the seller will take home after fulfilling financial obligations associated with the sale process. This concept is essential in real estate transactions, as it ultimately influences the seller's decision-making regarding pricing strategies and acceptance of offers.