What Costs Should I Expect When Selling?
Selling a home involves more than simply subtracting what you owe from the sales price. Your actual proceeds depend on the costs associated with your particular transaction. Here's a look at some of the expenses sellers may encounter.
One of the biggest questions sellers have is:
“How much will I actually walk away with?”
That's a much better question than simply asking what your home might sell for.
A sales price of $500,000 doesn't mean $500,000 goes into your bank account.
There may be a mortgage or other liens to pay off, real estate compensation, closing expenses, taxes, negotiated seller concessions, repairs, and other transaction-specific costs.
The good news is that we can help you look at the estimated numbers before you make important decisions.
Quick Takeaways
Selling costs vary from one transaction to another.
If you have a mortgage or other lien, the applicable payoff will generally be deducted from your proceeds.
Real estate compensation is negotiable.
Sellers may have closing or title-related expenses.
Property taxes and certain other expenses may be prorated.
A seller may agree to pay certain buyer expenses as part of the negotiated contract.
Repairs can create additional expenses during the transaction.
Your sales price and your net proceeds are two different numbers.
We will prepare an estimated seller net sheet to help you understand the numbers.
What Is a Seller Net Sheet?
A seller net sheet is an estimate showing what you may receive from the sale after anticipated expenses are taken into account.
We are required to prepare a seller net sheet when we list your home, and we also prepare a new net sheet with every offer you receive.
The listing net sheet gives you an estimate based on the anticipated sales price and expenses at the time your home goes on the market.
When an offer comes in, we prepare another net sheet using the actual terms of that offer. This is important because two offers with different prices, concessions, compensation requests, or other terms can result in very different proceeds to you.
That allows you to look beyond the purchase price and see an estimate of what each offer may actually mean to your bottom line.
Net sheets are still estimates. Final figures are prepared through the closing process, and amounts can change as the transaction progresses.
But you won't be evaluating an offer based only on the price at the top of the contract. We'll provide you with an estimated net sheet for every offer so you can see the financial picture before making your decision.
What If I Still Owe Money on My Home?
If there's an existing mortgage, home-equity loan, or another lien that must be satisfied as part of the sale, the appropriate payoff generally comes from the sale proceeds through the closing process.
Your current loan balance and the actual payoff amount aren't necessarily identical.
The payoff may include items such as interest through a particular date or other amounts owed under the loan.
The closing professional will obtain the appropriate payoff information as part of the transaction.
What About Real Estate Compensation?
Real estate compensation is negotiable.
There isn't one standard commission or fee that every seller is required to pay.
Before you list with us, we'll explain our compensation and the services we're providing so you understand what you're agreeing to.
A buyer may also ask the seller to pay compensation for the buyer's real estate agent. In the buyer agency agreements we use when representing our own buyers, our buyers agree that we will ask the seller to pay our compensation as part of the transaction.
When you're the seller, a request for buyer-agent compensation is something we'll evaluate as part of the entire offer. We'll show that expense on the seller net sheet so you can see how the request affects your estimated proceeds before deciding whether the offer and its terms work for you.
Are There Closing Costs for Sellers?
There can be.
The specific expenses depend on the transaction and the closing arrangements.
Seller expenses may include certain title, settlement, recording, tax, payoff, or other transaction-related charges.
Rather than giving you a generic list and telling you that you'll definitely pay every item on it, we'll use the information available for your transaction when estimating your costs.
Your closing documents will ultimately show the actual charges and credits associated with the sale.
What About Property Taxes?
Property taxes and certain other expenses may be prorated or otherwise handled at closing according to the contract and applicable closing practices.
That means the financial responsibility for an expense may be divided based on the appropriate period of ownership.
The closing professional calculates those amounts for the transaction.
You don't need to figure them out on the back of an envelope before listing your house.
Could I Be Asked to Pay Some of the Buyer's Costs?
Yes.
A buyer may ask the seller for a concession as part of an offer.
Depending on the transaction, that money might be applied toward allowable buyer closing costs, prepaids, or other permitted expenses.
You don't automatically have to agree simply because a buyer asks.
It's part of the offer.
We'll look at the entire proposal—including the purchase price and requested concessions—to help you understand what the offer may mean to your bottom line.
For more about this, see:
What About Repairs?
Repairs can affect your total cost of selling too.
You may decide to make certain repairs before putting the property on the market.
And after you're under contract, the buyer may request repairs or another solution depending on the terms of the agreement.
That doesn't mean every seller needs to create a huge repair budget before listing.
In fact, we prefer to see the home before you start spending money so we can help you think through what may or may not be worth addressing.
What About Preparing the Home for Sale?
Some sellers spend money getting their property ready for the market.
That could include things such as:
Minor repairs
Touch-up painting
Landscaping or yard work
Cleaning
Decluttering or storage
Other property-specific preparation
These aren't automatically required selling expenses.
What makes sense depends on your home.
We don't want you assuming that you need to spend thousands of dollars preparing a property before you can call us.
Call us first.
We'll go through the home with you and help you think through what may be worth doing.
Do I Have to Pay for Professional Photography and Marketing?
When you list with Team Martin, professional real estate photography is part of how we market your home, and we pay for it.
Every listing receives professional real estate photography and its own property website through our photographer.
Your property is also entered into the MLS, displayed on our website and the Waters Edge Realty website, and promoted through the marketing we provide for our listings.
For properties where additional media makes sense, we may also use options such as drone photography or video.
Those decisions are property-dependent.
For a detailed look at what we do, see:
→ How Will My Home Be Marketed?
Are There Costs If I Have a Homeowners Association?
Possibly.
If your property is part of a homeowners or condominium association, there may be transaction-related fees or requirements associated with the sale.
Those vary by association and property.
If your home has an association, we'll want that information early so the appropriate requirements can be identified during the transaction.
What If I Have a Termite Bond, Home Warranty, or Other Contract?
Tell us about them.
Some contracts or warranties may be transferable, some may involve a fee, and others may simply end when you sell.
We'll want to know what you have so we can determine whether it affects the transaction or whether additional information needs to be obtained from the provider.
How Much Will I Actually Receive?
Ultimately, what matters to most sellers isn't just:
“What did my house sell for?”
It's:
“What do I receive after everything is paid?”
That's your net proceeds.
A simplified way to think about it is:
Sales Price
– Payoffs
– Seller Expenses
– Agreed Concessions
– Other Transaction Costs
= Estimated Net Proceeds
The actual closing figures will be more detailed, but this helps explain why we pay attention to the entire offer rather than looking only at the price at the top.
Why Does This Matter When I'm Reviewing an Offer?
Because the highest purchase price isn't always the offer that produces the highest net—or the offer with the terms you prefer.
Suppose one buyer offers a little more but asks for a significant seller concession.
Another offers slightly less but requests fewer seller-paid expenses.
We need to look at the whole offer.
When we're reviewing offers with you, we'll help you understand the financial differences so you can decide which terms work for you.
Can You Estimate My Costs Before I List?
Yes.
We will prepare an estimated seller net sheet based on an anticipated sales price and the information available at the time.
If you're considering different pricing scenarios, we can look at those too.
For example:
“What might my proceeds look like at $450,000?”
versus:
“What might they look like at $440,000?”
That can be especially useful if you need a certain amount from this sale for your next purchase.
The numbers won't become final until closing, but an estimate gives you a much better starting point for planning.
The Bottom Line
If you only remember one thing from this article, let it be this:
The sales price isn't the same thing as the amount you'll receive from the sale.
Your mortgage or other payoffs, negotiated compensation, closing expenses, concessions, repairs, prorations, and other transaction-specific costs can all affect your final proceeds.
We'll help you look beyond the sales price and understand what the numbers may mean for you.
From Dana & John
We don't want you making decisions about your home based only on the sales price.
What matters is what the sale actually means for you financially.
Before listing, we will help you estimate your potential proceeds. And when an offer comes in, we'll look beyond the number at the top and help you understand how the terms may affect your bottom line.
We want you to know the numbers you're working with before you're asked to make a decision.
Continued Learning
These guides can help you understand pricing, offers, and your potential proceeds:
→ How Is the Market Value of My Home Determined?
→ How Do I Choose the Best Offer?
→ What Seller Concessions Should I Expect?
→ What Happens During Negotiations?
→ What Happens on Closing Day?
Have Questions?
If you're thinking about selling and want to know what you might actually walk away with, we can help you look at an estimated sales price, anticipated selling expenses, and potential net proceeds before you make your next move.
Dana & John Martin – Team Martin
Waters Edge Realty
318-504-9925 | 504-450-2714
ALGulfCoastAgents@gmail.com
