When selling a home, don't expect to pocket everything from the sale's proceeds. There are expenses that come with home selling, including broker commissions, closing costs, and other fees. After the deal, you'll probably end up with an amount much lower than the buyer actually paid. To understand where the excess money goes, a seller's net sheet comes into the picture.
The seller's net sheet is the sum of all the expenses incurred by selling a home. It's typically a document that breaks down all the additional fees that often come with selling a rental property or a home. The seller's net sheet is also known as the net sheet, seller's net proceeds, or the remaining balance.
In this article, we will explain all the nitty-gritty details of a seller's net sheet and its calculation:
Is A Seller's Net Sheet An Actual Document?
Yes, a seller's net sheet is an actual document that you'll see after closing the sale of your home. But if your agent or broker doesn't give you such a document at the time of closing, it doesn't mean you don't need one. While you will receive the net sheet at closing, it's never too early to be aware of these additional fees that come with selling a home. This way, you'll have an idea of what comes next after closing.
What Is A Seller's Net Sheet Made Of?
A seller's net sheet is a document that breaks down the different fees that come with selling a home. These expenses generally include:
- Real estate commission: The fee charged by the broker for selling your home.
- Closing costs: Additional fees charged by lenders and other parties involved in the sale of your home (i.e., title insurance, searches, notary).
- Administrative fees: Fees that come with processing loan documents, tax certificates, etc.
- Pre-paid expenses: Money spent on expenses that will be recouped after closing, such as interest
- HOA fees: Fees charged by the homeowner's association.
- Mortgage payoff: Money needed to pay off your existing mortgage.
- Cost to advertise your home for sale in the local newspaper, magazine, etc.
There are many others, but these are the most common seller's net sheet items. Sometimes, the costs included in the net sheet vary from person to person. You may not need to pay HOA fees, mortgage, or agent commission, and your net sheet will not include any of these.
How Is A Seller's Net Sheet Calculated?
Since there are so many different expenses, the seller's net sheet calculation is not as simple as it seems. But here's a general overview of how you can calculate your own:
Step 1: Subtract the real estate commission and administrative fees (if any) paid by the buyer from your closing costs paid by you. This is the net amount that comes to you after completing all formalities of the sale.
Step 2: If there was no prior loan on your property, simply subtract Step 1 from your sales price to get the net proceeds of your sale.
Step 3: If there was a loan on your property, add all the closing costs paid by you with any pre-paid expenses to Step 2's result. Subtract from this amount the payoff of the existing loan, if applicable.
Step 4: The final net amount is what you'll get at closing.
Who Prepares the Seller's Net Sheet?
Your broker or real estate agent prepares a seller's net sheet before finalizing the sale of the home. Sometimes, the seller may prepare the document themselves or get professionals such as an attorney, an accountant, or other experts to prepare it.
When to Get a Seller's Net Sheet?
As mentioned before, you need to know your net proceeds before closing. Even though your broker will send you the document at the closing time, make sure that your calculations are correct beforehand. A seller's net sheet is also helpful for tax purposes, as well as knowing your final net proceeds.
A seller must receive a copy of the net sheet. If you are not given one at closing, make sure to request one. It is a good idea to review the document with your broker or agent before finalizing the sale.
Why Is Seller's Net Sheet Important?
The seller's net sheet is vital as it helps prepare the seller for any additional expenses when selling a home. It can be intimidating to consider extra fees after selling your home, but knowing what comes next after closing is essential. These additional expenses might include property taxes, utilities, and other miscellaneous costs.
Things You Should Know About the Seller's Net Sheet
1. The Real Estate Commission Doesn't Come From a Realtor
You might think that the real estate commission is a fee from your listing agent or broker. In reality, it's a separate expense that stems from the sale of your home. It is usually paid by you, the seller, and taken out of the net proceeds of your sale.
2. A Seller's Net Sheet Is Not Legal Documentation
A seller's net sheet is simply an estimate of the additional expenses that come after closing, which doesn't mean it's legal documentation like the deed and the property’s title. Because hidden costs can always surface, you should not rely solely on a seller's net sheet to help you make important housing decisions.
3. The Seller's Net Sheet Is Negotiable
The seller's net sheet is negotiable, meaning the outstanding balance on your property before closing can be negotiated based on market conditions at that time. If you don't want to pay all the additional fees listed in the net sheet, just ask the buyer to lower the total amount due.
4. You Can Use The Seller's Net Sheet To Your Advantage.
Those selling their homes amid an economic downturn with many foreclosures and short sales in the neighborhood may find that they can negotiate more than what is shown on their net sheet. If you're selling your home in a buyer's market, you may be able to entice a buyer with a lower purchase price if they are aware there are additional costs involved.
However, this doesn't mean that the seller's net sheet is not important. In fact, it can help homeowners keep their options open and allow them to research the additional expenses so they know what they're getting into.
The net proceeds of a home sale are the amount that comes to you after all fees and expenses paid by both parties. The seller's net sheet calculates these out-of-pocket costs, so you know exactly what to expect from the sale, but it does not need to be treated as legal documentation.
Sometimes calculating the expenses in a seller's net sheet can be a nightmare, especially if you're coming across it for the first time. In this case, you'll need the help of professionals.
Our team at SimpleShowing can help you put your mind at ease by guiding you through the process and reviewing the results with you. Get in touch with us today, and we'll walk you through the entire process of putting your house on the market.