When it’s time to sell your house, perhaps the biggest question that will be on your mind is: how much will I make selling my house?
This is a real concern because nobody wants to sell their house at a loss. Knowing how much money you are likely to make from your house is important, especially if you are planning to use the proceeds to buy a new house.
The net profit you get from selling your house depends on several factors, including your existing equity, outstanding mortgage balance, and closing costs. Therefore, your home sale calculations must be personalized in keeping with these factors.
This article discusses these factors along with the steps you need to take when calculating the profit from selling your house.
Costs Associated With Selling A House
For you to know how much money you will make from selling your house, you need to understand the expenses involved in the sale process. For instance, you need to ask yourself: Do I need a lawyer to sell my house, and if so, how much will it cost me?
Home Prep Cost
For your house to be competitive in the traditional market, it has to be in great condition. This means that you often have to repair it or even do some upgrades to it before listing it. Research by Zillow and Thumbtack has shown that typical home sellers have to spend roughly $6,000 on home improvements and repairs before listing their houses. For homes in less than market-friendly condition, it’s often better for sellers to work with a company like Trusted House Buyers to purchase the property as-is.
You have to factor in the cost of moving from your house. This includes hiring professional movers, moving trucks, storage units, temporary housing, etc. The cost of moving depends on the distance covered and the items to be moved.
A mortgage payoff is the amount of money you pay to your lender to clear your outstanding mortgage. You also have to consider the amount needed to pay your home equity loans and any lines of credit associated with the house.
The amount of mortgage payoff depends on how many years of the amortization period you have been making payments. Was your loan a 15-year, a 20-year or a 30-year mortgage? How many of those years have you been making payments?
The less equity you have, the higher the mortgage payoff amount will be. If you are underwater, it means that you owe more money than your house is worth. In this case, you might have to bring extra money to the closing to pay off your mortgage.
Closing costs are the biggest expenses you have to take into account as the seller. In fact, it can cost you about 10 percent of the sale price. So, if your house is selling at $630,000, the selling cost is about $63,000. These costs include agent commissions, title insurance, transfer tax, escrow fees, prorated property taxes, HOA fees, mortgage points, and attorney fees.
How To Calculate Your House Sale Profit
Once you’ve understood the involved costs, it’s time to estimate the proceeds. Here are the most important steps you need to take when estimating the proceeds from selling your house.
Determine House Value And Possible Sale Price
Several factors determine the value of your house, including its overall quality, location, and market conditions. So, you have to keep these factors at the back of your mind when coming up with the sale price. You can also hire a trusted real estate agent to provide you with a comparative market analysis (CMA) or search for comparable recent house sales in your area.
Get A Mortgage Payoff Quote
You need to ask for a mortgage payoff quote from your lender to know how much you will be required to pay at closing. You also need to know if they will charge you a prepayment penalty. Different lenders use different methods to calculate their penalties. It can be a flat rate, a fraction of the loan balance, or a percentage of the outstanding interest.
Consider The Cost of Staging
Home staging involves decluttering, depersonalizing, cleaning, and whole-home staging by professionals. Home prep costs vary from one state to another. You also need to consider home repairs, marketing costs, and agent commissions.
Consider The Transaction Fees
You need to pay things like transfer tax, prorated property tax, title insurance, and other related costs at closing.
You can avoid many of these expenses by selling your house to a trusted real estate company like Trusted House Buyers. This company covers all costs and doesn’t charge agent commissions, allowing you to make the highest possible amount from the sale of your house. Still, you may be interested in learning how much an investor will pay for your house, even before you call them.