How Much Money Do You Get When You Sell Your House?
Selling your house can be nerve-wracking and confusing. Since your home has very likely been your biggest financial investment, it’s important to set about things the right way. While the calculations involved with this process can vary quite a bit depending on the situation, there are some things you can keep in mind to help you roughly know what to expect.
How Much Money Do You Get When You Sell Your House?
Understanding Net Proceeds
Once you’ve factored in all the money you had to spend actually selling your house, you’ll be left with the net proceeds. So in general, the net proceeds will be the sale price minus your sale prep costs, closing costs, or the amount of your mortgage payoff.
There can be a lot of hidden costs when it comes to getting your house sold, so keeping track of where your money is going during this process is key to getting the right bang for your buck.
Common Costs While Selling Your House
As we look into how much money you’ll keep while selling your house, any outstanding mortgage balance is going to play a role in what you get to pocket from the sale. The closing costs and your current equity also play their part in the money you can expect to make.
A Closer Look at Your Mortgage Payoff Amount
Your mortgage payoff is how much money you owe for your house. When it comes to calculating your sales expenses, if you’ve taken any lines of credit or equity loans against your property, you should include those costs in your calculations.
If the value of your home has increased significantly, or if you’ve owned your house for a long time, the mortgage payoff should be much lower than your sale price. This is a good thing, since it means more money for you.
On the other hand, when you have less equity that means you’ll have a higher payoff amount when compared to your sale price. That’s why knowing what to expect from your mortgage payoff is very important when it comes to figuring out the money you’ll be able to make at sale.
Other Common Expenses
In addition to the above factors, there are other elements that buyers should keep in mind as they’re figuring out how much money they’ll make from their sale.
1. The Cost of Home Prep
Staging is another term for this “tidying up” process. Home prep is important to a lot of buyers, so most sellers do some form of staging when they put their house up for sale. The goal while selling your home is usually to make the house not only look clean and appealing but to organize things in a way that allows potential buyers to imagine their own stuff and their own lives in the house.
For some sellers, staging could mean tackling a project they think will improve their home’s worth, while for others the process of staging is as simple as cleaning, decluttering, and depersonalizing. These investments should ultimately help you make the sale, so it’s usually worth it to make some improvements as long as you’re keeping your budget in mind.
During the staging process, you may notice something that needs to be repaired. Many sellers will repair anything they think could be an issue when it comes to their home’s desirability.
Another time you may have to worry about repair costs is if the buyer requests certain repairs before closing. Some sellers may opt to provide credit at closing, so the new buyers can use that credit to have the issue fixed themselves.
Deal With Repairs Ahead of Time
What usually makes the most sense is to get any major fixes out of the way before listing. Upgrades can definitely help your house be more appealing, and the goal of these upgrades is to try to drive in more interest and higher offers than you would have gotten before.
Getting the repairs done beforehand also gives you more control over exactly how much you’re willing to pay for repairs, instead of having to compromise with a buyer on what they think the repairs are going to cost.
2. The Cost of Moving
If you need to use the services of professional movers or a truck rental, those are costs you’ll have to consider when it comes to your net proceeds. Even if you roll up your sleeves and move out all on your own, the price of packing materials and housing costs if you have to stay somewhere temporarily will take their slice of the money pie.
Moving locally is less costly when it comes to gas and professional moving fees. Make sure you research ahead of time to see the price per hour and per mover for the company of your choice.
3. Transaction Fees and Closing Costs
One of the biggest expenses you’ll have to face will probably be closing costs. This will usually take a percentage of the sale price. How much of a percentage it takes can vary widely depending on various factors. A realtor should be able to help give you an estimate of what your transaction fees and closing costs will be.
The term “closing costs” is usually used to refer to a range of charges. This will include various taxes or fees taken from a home’s sale, as well as commissions, mortgage points, attorney fees, and the cost of listing and buying agents.
How to Start Calculating Your Profit
Once you think you have a good grasp on the charges you can expect it will be much easier to estimate your sales proceeds. First, you should consider the value of your home. The home’s location and market conditions will factor into this, as well the overall quality and upkeep of the house.
Trying It on Your Own
Determining a fair market value for your house can be done in a few different ways. One easy way to do this is to hop online and take a look at what similar houses in similar areas are selling for. For the most accurate results, try to focus on houses that have sold within the last six months. The more recently they’ve sold, the more relevant this information will be for you.
The problem with this method is it’s not completely accurate, and your estimates could end up a little out of whack, which is one reason you may want to consider a realtor’s help.
Loan Payoff Quotes
In addition to a realtor, your lender can also help you determine your potential earnings by providing a loan payoff quote. Your loan payoff may be different from the remaining loan balance you’re used to seeing on your monthly statement. That’s because a loan payoff may also include any owed interest or closing fees that will be expected of you when you sell. Keep in mind that these quotes are usually only good for 30 days or less.
When you talk to your lender, you can ask them about any prepayment penalties for the loan. Not every loan will have this penalty. For houses that do have this penalty, it’s usually designed with just the first few years in mind. This means if you’ve owned your house for a while you probably won’t have to worry about it.
The goal of a prepayment penalty is to allow a lender to recover the interest charges they’ll lose out on when you close out the loan during the sale. While this penalty doesn’t apply to everyone, it is worth asking your lender about it just in case. The penalty may be calculated by either a percentage of the interest you still owe or a flat rate.
Getting Professional Help
After All These Costs, Why Hire a Realtor?
The truth is, crunching the numbers on your own can be stressful and time-consuming, and it’s pretty important to get it right. When you try to do it on your own, you can run the risk of miscalculating and throwing your budget off track. An agent has the training and experience to give you the most accurate numbers possible, and to help you keep your planning and budget in check.
Hiring a Realtor Can Actually Save You Money
Realtors know their way around selling a house for the right price, and your success means success for them too. It’s in their best interest to get you the best price and help you understand the selling process.
The right realtor will be able to tell you if you’re asking too little or too much for your house. They can also offer advice about navigating the whole complicated process, to ensure you get the best results possible.
They’ve Got Connections
Knowing the right people makes a world of difference in almost any situation. A respectable realtor with a good reputation will have an invaluable inner network. Realtors are constantly working together and discussing various properties with each other. If you need help with part of the selling process, chances are your realtor will know someone they trust who can lend you a hand.
David Dorman is a well-known and respected realtor who has worked tirelessly to help the people of his community as they make some of the most important financial decisions of their lives. If you want a professional hand when it comes to buying and selling your home, reach out to David Dorman in Ocoee, FL, today to learn more.