How Much Money Do You Keep After a Home Sale?
Selling a home is an exciting milestone, but it’s not just about finding a buyer and signing the paperwork. The financial side of the transaction plays a big role in determining how much you’ll actually walk away with.
One common mistake sellers make is overestimating their home’s value while underestimating the costs associated with selling. From closing fees to other expenses, these costs can significantly impact your bottom line. That’s why it’s important to determine your home’s market value and the total costs of selling a home before doing so. This guide will walk you through the process step-by-step, helping you calculate how much money you’ll keep after the sale.
How To Determine the Value of Your Home
Before officially deciding to sell their home most homeowners want to know how they’ll net after the sale. The first step in figuring that out is determining your home’s value and what it would realistically sell for in today’s market. There are several ways to estimate your home’s worth and get an idea of what a buyer “might” be willing to pay. Here are the most common methods.
Comparative Market Analysis (CMA)
A Comparative Market Analysis is an evaluation conducted by a real estate agent to estimate your home’s value based on recent sales of similar properties. To create a CMA, the agent collects data on recently sold homes—often referred to as “comps” (comparable properties)—that closely match your property. The homes used for comparison typically share the following characteristics:
- Same Neighborhood: The closer, the better, since home values can vary significantly between different locations, even within the same area.
- Recently Sold: The best comps are those that have sold within the past 3 to 6 months, as market conditions can change over time.
- Similar in Size& Layout: The agent compares properties with a similar number of bedrooms, bathrooms, and square footage.
- Comparable Lot Sizes: A home on a large lot may be valued differently than one on a smaller parcel of land, even if the house itself is similar in size.
- Similar Features & Upgrades: Homes with pools, remodeled kitchens, or updated flooring will be weighed against properties with similar characteristics.
Once the agent gathers data on comparable sales, adjustments are made to account for any differences. For example, if a recently sold home has a pool but the subject property does not, the agent will deduct the value accordingly. While a CMA doesn’t offer an exact figure, it provides a well-informed estimate of what your home could potentially sell for in the current market.
Home Appraisal
A home appraisal is an independent assessment conducted by a licensed real estate appraiser to determine the value of a property. This is typically required by mortgage lenders during the home-buying process to ensure that the home is worth the amount being financed. However, homeowners may also choose to get an appraisal before selling to gain an accurate understanding of their home’s value.
During an appraisal, the appraiser inspects the home’s size, condition, layout, upgrades, and overall appeal. They also analyze recent sales of similar properties, comparable homes, to determine a fair market value. Factors like neighborhood trends and current market conditions are also considered in the valuation process.
Once the evaluation is complete, the appraiser provides a detailed written report with the home’s “appraised value.” Unlike a Comparative Market Analysis (CMA) prepared by a real estate agent, an appraisal is a legally recognized, unbiased valuation used to protect both buyers and lenders in a transaction. One thing to keep in mind though is appraisals are considered an “art,” not a “science.” So no two appraisals will be the same and the appraised values could greatly vary.
Online Home Valuation Tools
Many homeowners turn to websites like Zillow to use their online home valuation tools to estimate their home’s worth. However, relying on these tools is one of the least accurate ways to determine your home’s value. These websites use broad area averaging to come up with a number, but they don’t take into account the unique details of your property. They’ve never seen your home, its upgrades, or its condition.
For example, if most homes in your neighborhood have a pool but yours doesn’t, the online tool will likely calculate your value as though you have a pool, which could result in an overestimated value. On the other hand, if your home has been completely renovated inside and out while your neighbor’s property, though similar in size and location, has not been updated since the 1970s, the valuation tool will still treat them as comparable, which isn’t accurate and could underestime the value.
For these reasons, I would not recommend using these tools to determine your home’s value. They can provide a rough estimate for the area, but they don’t account for the specific features and improvements that make your home unique.
Home Value VS Home Sale Price
While CMAs and home appraisals can offer a good estimate of what your home may sell for, the pricing provided isn’t guaranteed. The true value ultimately comes down to what a buyer is willing to pay—and what a lender is willing to lend if financing is involved.
That’s right—just because your home appraised for a certain amount doesn’t mean a buyer will pay that price. CMAs and appraisals are based on comparable sales, but the way real estate agents and appraisers select comparables and make adjustments can vary significantly. In fact, if you asked 10 different agents or appraisers to assess your home, you could end up with 10 different values. However, these figures should fall within a reasonable range. If there’s a significant gap between the lowest and highest estimates, it’s worth evaluating why there’s such a large discrepancy.
Once you find a buyer and go under contract, you’ll know your home’s sale price, but that’s not the final amount you’ll take home. To determine your net proceeds, you’ll need to factor in expenses and closing costs.
Expenses and Closing Costs to Deduct
The next step in figuring out how much money you’ll keep after selling your home is knowing your closing costs and expenses. These costs will be deducted from the sale price, determining your final net proceeds. Below are the most common expenses sellers typically pay at closing.
Mortgage Payoff
- The remaining balance on your mortgage must be paid off at closing
- Some lenders may charge a prepayment penalty
- Any secondary liens, such as a line of equity
Real Estate Commissions
- Real estate commission is negotiable and many agents offer different levels of services at varying rates
- Transaction, processing, and/or admin fee
Closing Costs
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- Title insurance
- Doc stamps
- Recording fee
- Title closing
- Title search
- Tax lien search
- HOA estoppel & fees
- Property taxes
Repairs and Pre-Sale Expenses
Capital Gains Tax
- If applicable, taxes may reduce your profit
Miscellaneous Costs
Defining Net Proceeds
Net proceeds refer to the amount of money a seller walks away with after all expenses, fees, and closing costs have been deducted from the home’s final sale price. While the sale price might seem like the total amount a seller will receive, various costs must be accounted for before determining the actual profit. So the net proceeds are how much money you’ll keep after a home sale, which could be a gain or loss.
Final Thoughts
Determining how much money you’ll keep after selling your home involves more than just looking at the sale price. While a CMA or home appraisal can give you an estimate of your home’s value, the final amount you walk away with depends on several factors, including how much a buyer is willing to pay, closing costs, and any outstanding mortgage balance or liens on the property.
By understanding all of these expenses upfront, you can better prepare for the financial side of selling your home and set realistic expectations. Whether you’re selling to maximize profit or to move on to your next chapter, having a clear picture of your net proceeds will eliminate any potential surprises when the sale is finalized. If you’re unsure about the cost to sell a house, working with a knowledgeable real estate professional can help you navigate the process and get the most out of your home sale.
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About the Author
Top Wellington Realtor, Michelle Gibson, wrote: “How Much Money Do You Keep After a Home Sale?”
Michelle has been specializing in residential real estate since 2001 throughout Wellington Florida and the surrounding area. Whether you’re looking to buy, sell, or rent she will guide you through the entire real estate transaction. If you’re ready to put Michelle’s knowledge and expertise to work for you call or e-mail her today.
Areas of service include Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres, and more.
