Here’s How Much Money You’ll Keep After Selling a House
Perhaps you bought your house years ago and after an arduous purchase process, thousands spent on maintenance, and painstaking dedication to making it feel like home, you now want to reap the full benefits at selling time.
One pitfall of having high expectations for how much money you’ll keep after selling a house is overestimating your home’s value and underestimating the costs involved in the selling process. In this post, we’ll examine all the finer details that go into how much money you’ll pocket when the transaction is said and done.
Start with a home value estimate
One of the first steps in assessing how much money you’ll keep after selling your house, is determining its possible market value. A quick and painless way to do this is to use HomeLight’s Home Value Estimator to find out what your home might really be worth. This free automated valuation model (AVM) tool will use recent sales transactions, local market trends, and your home’s latest selling price, to provide a preliminary range of value for your property in under two minutes. Just enter your address to get started.
The estimate is a ballpark indicator of how you might set the sale price. However, keep in mind that the sale price is different than the amount you’ll walk away with, but we’ll get more into those details later.
“Contacting a local agent in your market is the most effective way of finding a true market evaluation,” says Marissa Papa, a Connecticut real estate agent with 18 years of experience. “It’s a very prudent part of the process as an experienced agent can provide a comparative market analysis.”
Another option is for sellers to get a pre-listing appraisal, although, according to Papa, it’s not common in the current market. Additionally, an agent who is knowledgeable about trends in your zip code is going to be relying on the same factors of analysis as an appraiser, she says. For sellers who want to get a pre-listing appraisal done anyway, prepare to spend between $350 and $750.
While working with a seasoned agent is a crucial first step, doing your own online research to get an estimated value is a great way to kick off the home selling process. With home values across the country increasing by an average of 19% in a single year, it’s good to keep track of where things stand for your own property.
How much money will you keep after selling your house?
In addition to the sale price, there’s a sizable list of factors that affect how much money you’ll net at closing. Here are some of the most common ones:
- Mortgage balance pay-off amount
- Agent commission
- Method of selling (for sale by owner, cash buyer, or iBuyer)
- Cost of repairs or improvements
- Total concessions or buyer incentives
- Closing costs, including state and local taxes and fees
- Moving expenses
Depending on whether you have a mortgage and how much balance is remaining, this item will likely be the single largest deduction from the sale price. If you don’t have a mortgage, your proceeds can be generally calculated by taking the sale price minus selling costs. However, if your remaining mortgage balance is $250,000, for example, and your home sells for $500,000, you’ll net $250,000 minus the remainder of your other costs.
We’ll break down the basic selling costs below but you can take a shortcut now and jump right to HomeLight’s free Net Proceeds Calculator to get an idea of how much you might make selling your home.
How much does it cost to sell a house?
Now that you have the gist of how the sale proceeds are divided up, next we’ll look at the breakdown of the specific costs involved with selling your house. This will help you craft a more accurate estimate for the proceeds you’ll ultimately pocket.
Keep in mind that total out-of-pocket costs vary from sale to sale as there are a number of variables and decisions involved in the outcome. However, there are some general trends to consider.
Knowledge is key throughout the process. If you’ve got a really good agent working on your behalf, vetting these offers, you could go in the direction where you pick the offer that’s letting you walk away with the most money.
What are common expenses for home sellers?
Based on our interviews and research, here are some of the top expenses you can expect when selling a home.
Preparing your home for sale
- Home repair costs vary, however in 2021 homeowners spent an average of $10,341 on repairs for the year.
- Staging to convey what your home looks like at its best – $1,000-$3,000
- Professional cleaning services – $200-$400 for move-out cleaning
- Interior painting – $2.75 per square foot
- Landscaping – $700
- Pre-listing inspection, if desired or needed – $350 and $750
- Moving expenses – $1,250
- Settle utility bills – varies
As repairs and improvements can add a hefty sum to your costs, it’s best to consult with your Realtor® before embarking on any projects to ensure that you choose the ones that are necessary or will yield the highest ROI.
Paying the Realtor®
One of the biggest expenses is your real estate agent’s commission, which averages between 5% to 6% of the total sale price and typically gets divided between the buyer’s agent and the seller’s agent. Keep in mind that the seller is generally the party responsible for paying the agent commission.
For example, if the home sells for $450,000, then you’ll likely have to pay as much as $27,000, which would be divided between the agents involved in the transaction. While this might seem like a lot of money to part with, remember that working with a top agent can not only help you sell for top dollar, but also save you the time it takes to market the house and deal with the stickier aspects of the transaction such as negotiations.
“Every agent commission is negotiable, so it’s in the seller’s best interest to negotiate the contract they sign with an agent,” says Papa.
Though not common in all states, some more complicated transactions such as ones involving a divorce between the sellers might involve a real estate attorney. Such professionals can run about $243 per hour, though this too is negotiable, according to Papa.
Try HomeLight’s Agent Commissions Calculator to get an idea of how much you might pay in Realtor® fees when selling your home.
During the contingency period, negotiations between buyers and sellers usually take place that sometimes result in concessions or incentives in the buyer’s favor. For example, if the property inspection shows that significant repairs related to the safety of the house or the health of future occupants are needed, the seller might either pay directly for those repairs to be done before closing or credit the buyer an agreed upon amount to cover the work.
In other scenarios, sellers might agree to cover all or part of the buyer’s closing costs. Sometimes even a reduction of the previously agreed upon sale price can come into play, which will effectively reduce the amount a seller will net from the transaction.
These costs vary from market to market and property to property. However, Papa advises ways to mitigate the costs. For instance, having a pre-listing inspection done can give you an opportunity to address any glaring issues so there are no surprises during the contingency period. In a sellers’ market, some buyers will even waive the inspection contingency to sweeten their offer. Additionally, some people opt to sell a property as-is, however, consult with your agent to determine if that’s recommended for your property.
“Knowledge is key throughout the process,” says Papa. “If you’ve got a really good agent working on your behalf, vetting these offers, you could go in the direction where you pick the offer that’s letting you walk away with the most money.”
Here’s a list of some common seller concessions or buyers incentives:
- Home inspection fees – $300 to $500
- Buyer’s home warranty – $432 to $816
- Covering closing costs – 2% to 6% of the purchase price
- Repair credit (reduces your net proceeds) – varies, but mortgage lenders usually place limits on the amount of credits allowed
- Purchase price reduction
- Labor and materials costs associated with directly paying for repairs requested by buyer (can be reduced if your agent has connections with contractors)
Closing costs and additional fees
Although your mortgage balance payoff will likely be the largest item you’ll pay for at closing, there are other expenses, some of which can vary by city or state.
On average, sellers pay about 6% to 10% of the sale price in closing costs. With a median U.S. home price of $391,200, prepare to pay as much as $39,120. However, keep in mind that the figure is highly variable.
Here’s a list of typical closing costs:
- Mortgage loan payoff – $112,000 to $438,000 (averages vary widely by state)
- Escrow fee – 1% to 2% of sale price (negotiable between buyer and seller)
- Title fees – 0.5% to 1% of the sale price
- Homeowner’s association dues – prorated portion of the annual amount
- Reconveyance fees – $50 to $65, though varies by state
- Attorney fees (if an attorney is required in your state) – $243 per hour though negotiable
- Property taxes – varies, usually prorated portion of the annual amount
- Transfer tax – varies, up to $3 per $1000 of transferred net value
An example of how much you might keep after selling a house
Use the following example based on the median home sale price to get a sense of how much you might take away from your sale. For further insights, check out national averages for sellers’ costs and fees.
|Selling expense||Example cost||% of home sale price|
|Prepping your home for sale||$12,520||3.2%|
|Realtor® fees (commissions)||$23,472||6%|
|Closing costs, taxes, fees||$11,736||3%|
|REET tax (varies by state)||$5,007||1.3%|
|Total selling cost example||$212,735||54.4%|
*Based on median U.S. home price of $391,200
- Final home selling price: $391,200
- Subtract total of all selling expenses: $212,735
- Example of net proceeds: $178,465
Now before you pop the champagne to celebrate all the money you made, consider if your property sale proceeds are subject to capital gains tax. If the house was your primary home for at least two years or for at least two out of the five previous years, you may qualify to exclude up to $250,000 of profit from the taxation and up to $500,000 for married couples filing jointly.
How can you reduce your costs as a seller?
After crafting the right listing price to maximize your return, it’s natural to not want chunks of money taken out of your proceeds. The following are some ways to reduce your costs, however, remember that investing in the sale process can help you get more money out.
As you look ahead to your next home purchase, try these other free HomeLight tools for buyers:
Home Affordability Calculator
Down Payment Calculator
Closing Costs Calculator
Partner with a top agent for the best home-selling outcome
Your best bet for the highest home sale proceeds is to partner with a top real estate agent who can guide you through each step of the process. After negotiating an appropriate commission with your agent, they can help you craft the best list price, advise on what repairs are worth your while, market your property, steer you toward the most promising offer, and negotiate terms in your favor.
HomeLight’s free Agent Match platform can connect you with the highest-performing agents in your market who can help you make the best of your home sale.
Header Image Source: (Roger Starnes Sr / Unsplash)