When It Comes to Heating Oil Credits, Clarity is Key

Understanding the nuances of property transactions can be a bit like deciphering a puzzle, right? Especially when it comes to calculating seller credits related to oil-fired heating systems. If you’re gearing up for the Humber/Ontario Real Estate Course 2 Exam, let’s break down a scenario that often comes up: how much a seller gets credited for heating oil in the tank at closing.

Imagine this: A seller has a property equipped with an oil-fired heating system, complete with a spacious 195-gallon oil tank. Just the day before the closing date—mark your calendars, it’s January 11th—the seller fills up 110 gallons of oil. Now, here’s where it gets interesting: each gallon costs $6.50. So, if you’re tracking these figures, what’s the total credit the seller can expect when the ink dries on that sale?

First off, let's tackle the straightforward part. We know that 110 gallons were filled up right before closing, costing $6.50 each. So, are you following along? Here’s the breakdown: you simply multiply the amount of oil filled by the price per gallon:

110 gallons x $6.50/gallon = $715.00.

However, the plot thickens! Our seller's oil tank has a total capacity of 195 gallons. Since they’ve just filled 110 gallons, it’s essential to consider what was previously in the tank. There were

already 195 - 110 = 85 gallons in there from a previous fill.

Now let’s determine the worth of the oil that’s actually in the tank at the time of closing. It’s pretty simple, really. You multiply the total capacity (195 gallons) by the price per gallon to find the total value of the oil that came with the property:

195 gallons x $6.50/gallon comes out to—drumroll, please—$1,267.50.

So, when all the numbers are crunched, the amount credited to the seller at closing is indeed $1,267.50.

Why does this matter? It’s crucial. As a real estate professional, understanding these details not only helps you ace your exams but also prepares you for real-world transactions where every penny counts. Remember, clarity in calculations can enhance your credibility, showcasing your expertise to clients who trust you to guide them through the labyrinth of property sales.

Now, think beyond just oil. This kind of calculation mindset can be applied to various closing costs and seller credits throughout real estate transactions. Each aspect requires a keen attention to detail. When it comes to handling other seller scenarios—like repairs, prorated property taxes, or shared utilities—having a solid grasp of math can greatly benefit you.

Next time you’re reviewing a property with an oil-fired heating system, or any complexities really, reflect on this oil tank credit as a foundational example. Brush up on those calculations, sharpen your skills, and you’ll stride confidently into your exam and out into your career.

There you have it—a clear understanding of how seller oil tank credits work in real estate. Now go ahead and feel a bit more prepared for your Humber/Ontario course exam. Who knew that a little oil could fuel such important knowledge?