If you’re thinking about putting your home up for sale, you’ve probably also wondered just how much you’ll make from selling your house.
After all, buying that house was a big investment. You probably spent a lot of money over the years to improve it, too.
Fortunately, if you understand how to estimate the price of your house and what you’ll need to deduct, it’s actually pretty simple to come up with a reliable number.
How to Determine How Much Your House Will Sell For
Ultimately, how much you’ll make from selling your house will largely depend on how much you decide to sell it for. Obviously, the same profit margin is worth more when you sell your house for more. So, while other factors will come into play – which we’ll cover in a minute – the most important place to start is with the actual price of your house.
This is why you can’t leave the number to chance. If you simply assume how much your house is worth and put it up for sale at that amount, you’ll probably be disappointed by the results.
Nowadays, many people turn to Zillow Zestimates to get an idea of what they may be able to sell their houses at. It can definitely be a helpful starting point if you’re not yet sure you want to sell or not.
However, it shouldn’t be your only resource for deciding what to sell your house for, especially because there’s a much better option available.
Get a Comparative Price Analysis Done to Determine the Value of Your Home
Once you know for sure that you plan on selling your house, you need to have a comparative market analysis (CMA) done to figure out what a realistic price would be. In short, a CMA looks at how much other homes similar to yours in the area have recently sold for.
This will give you a great reference point for the asking price of your own house because it objectively tells you what others have been willing to pay.
It can also provide insights into what kinds of home improvement projects may be helpful for increasing your price or just reducing the amount of time it takes to find a buyer.
4 Deductions to Factor Into Your Revenue
That said, it costs money to sell your house. No matter how much you are able to ask for it, certain deductions will cut into that revenue. While these amounts will be different for everyone, how much you make selling your house will probably depend on how much you need to spend on the following.
1. Pre-Sale Costs
Selling your house is a big decision, which means you want to be 100% sure it’s ready to attract the most amount of money possible.
For most homeowners, this means they have to spend some money upfront to ensure their house looks its best. Unless you plan on listing your house as-is, you’ll most likely want to do the same.
Now, to what degree you plan on doing this – and how much money you want to spend in the process – will depend on your own unique situation. Again, this is why having a CMA done is so helpful. Maybe it’s not worth paying for certain repairs because it’s a seller’s market and you know that your property compares extremely well with others in the area.
Still, it’s usually worth paying for a home inspection prior to listing your home. Otherwise, your asking price will fall considerably if a potential buyer has one done and finds a problem you didn’t know about.
Another common expense is the cost of staging your home. A lot of homeowners feel up to the challenge of handling this task, but it might be best left to the professionals. Staging your home can result in a faster sale and potentially higher price.
2. Real Estate Agent Fees
Again, you could decide to do a for-sale-by-owner even though you’re not a real estate agent, but this isn’t recommended. It’s a lot of work and there’s a lot of room for costly errors. The last thing you want to do is make a big mistake when it comes to something as big as selling your house.
Fortunately, real estate agents get paid on commission, so this isn’t an out-of-pocket expense like the last example. Instead, you’ll need to pay the agents 6% of what you’re able to get for your home.
If that seems like a lot, then you should explore a popular alternative: 1% commission real estate agents. This much lower rate will net you thousands on the sale of your house.
3. Property Taxes
Don’t forget about your property taxes. As you most likely pay these in advance, you’ll need to pay them at a prorated amount for the time you’ll be in the house up to the closing date. This money will be placed in escrow until closing.
On the other hand, if you’ve already paid your property taxes for the year, you should speak to your real estate agent about getting a rebate for the months you won’t be in the home after the sale. At closing, the buyer will reimburse you for that total. Again, this could net you thousands of dollars when selling your house.
4. Contract-Specific Deductions
Finally, every sale is different, so yours could involve a unique factor or two that impacts how much you’re able to sell your house for.
One common example is the buyer asking for help with closing costs. It’s become more and more common in a buyer’s market for this to happen. You most likely wouldn’t have to pay for all of those costs, but it might be worth paying for a couple in order to secure the sale.
This is another time when it helps to work with an experienced real estate agent. They might be able to negotiate a higher price for the house so that you simply factor those closing costs into the total. That way, your profit margin doesn’t suffer.
Hire an Experienced 1% Commission Realtor to Keep More from Your Home's Sale
At SimpleShowing, we love helping our sellers make the most money possible on their home sale. Off the bat, we save our sellers 2% with our low, 1% listing fee.
Our sellers still get listed on the MLS, professional photos, negotiation and contract support, paperwork management and all the other services they need from a real estate agent. They just don’t have to spend as much on commission in the process.
Contact us today to learn more about working with one of these agents.
Conclusion
Calculating the net proceeds from a home sale requires consideration of numerous factors. Factors such as the home sale price, the fees associated with real estate agents, transfer tax, closing fees, escrow fees, attorney fees, home staging costs, and your remaining mortgage balance can all significantly impact the total. To ease this complex calculation, a home sale proceeds calculator can be a valuable tool, giving you an estimate of your expected income after these deductions.
A home sale calculator can also assist in factoring in potential capital gains tax. Although this can vary based on a number of stipulations, knowing the likely impact of capital gains taxes on your bottom line is crucial. Selling costs, such as those paid to the escrow company, will also have a bearing on your estimated net proceeds. Remember, the final figure isn't just about the home's sale price, but the balance remaining after all associated costs and taxes are accounted for.
Ultimately, selling your house entails an array of costs that you may not initially consider. Mortgage payoff, transfer taxes, and a host of other expenses all subtract from your home's sale price. But with careful planning and informed use of tools like the home sale calculator, you can make the most of your sale, comprehending what to anticipate and how to optimize your net proceeds. It is always advisable to consult with real estate professionals and tax advisors to understand how these figures apply to your unique situation.
