Considering selling your home?  It’s critical to know what your home will sell for, but it’s even more important to know how much money you will walk away with – or as Jerry Maguire would say “Show me the money”!

Will there be enough for… a down payment on a new place, or to retire, or to send the kids to college or to …..?  So how do you figure this out? The internet is flooded with Home Valuation sites, but these are rough estimates at best, and never share the real costs of selling.  Let us clear this up for you!

A lovely family recently contacted us about selling their Indianapolis home.  They were first time sellers and had many questions about how the process works.  We chatted about this for a little while and then began discussing the value of their home and how much money they could actually expect to receive at the closing table.  As always, we had prepared a custom Estimated Net Proceeds document (see below) with 3 different sales price scenarios based on recent sales in their neighborhood.  They were so relieved to see all of the costs spelled out!  They were expecting brokerage fees and realized there were other expenses too….but had no idea what they really were or how much they would be.    They called these mystery expenses “the scary stuff in the middle” —  between the sales price and their profit!


So what is all that “scary stuff” in the middle?  Here are the most common:

  1. Brokerage Fees make up lines 2 and 3. These can vary, but usually average around 6% of the sale price and are split between the listing and selling broker.
  2. Seller Assistance with Buyer Closing Costs. If the offer requests the seller to contribute a certain amount (anywhere between $1000 – $4000) towards their closing costs, this would be reflected here.
  3. Pro-Rated Property Taxes. In Indiana, property taxes are paid one year in arrears (behind).  In this example the closing date is March 31, so taxes are still owed for all of 2015 and from January 1 to March 31 2016.  Because the state has not yet billed these taxes, the seller provides the buyer a credit for the taxes still due and then the new owner assumes all tax payments from the date of closing.  If the sellers are also buying a new home in Indiana, they will receive a similar tax proration from the sellers of that property, so this may be a wash if you’re remaining in Indiana.
  4. Title Company Fees. It’s customary for a seller to provide an owner’s title policy for the buyer.  This insures the buyer against any unknown liens or title issues on the property.  The actual owner’s premium is based on the sales price so it may change with each counter offer, however the other title fees normally remain constant.
  5. Other Expenses include miscellaneous fees such as State Insurance fees, county recording fees and possibly a Home Warranty (which can range in price from $390 – $600).

The fees are subtracted from the sale price to determine the subtotal.  Then the Mortgage Balance is also subtracted to determine the Estimated Net Proceeds – the amount the seller will walk away with after the sale.

When our sellers receive an offer they see this document again, but this time it’s updated with the actual numbers from the Offer and any Counter Offers.   The numbers highlighted in red clearly indicate what changes with each counter and most importantly, how they affect the seller’s bottom line.   The line items in yellow are calculated based on the sales price, so they will also adjust slightly if the price changes.

So let’s look at a different real life example:

The list price of a property is $238,900 and reflects a net proceed of $30,739.  The property owners actually received an offer for $228,500, with $2500 in seller closing cost assistance and a $545 warranty to be provided by the seller.  If accepted, this offer would net them $18,080.  The sellers counter back, increasing the sales price to $237,000, lowering the seller closing cost assistance to $1500 and leaving the warranty as a seller expense.  The buyers sent their own counter again with a lower price and the $2500 in closing cost assistance. The sellers then sent their final counter with a selling price of $237,000 and allowing the $2500 closing cost assistance, but removing the warranty. The buyers accepted this counter offer so after all expenses and the mortgage payoff is subtracted, the sellers can expect to receive a check at the closing table for approximately $26,615. 


When you know and understand the numbers, they aren’t nearly as scary!  Sellers love how easy it is to keep track of their bottom line when this net sheet accompanies each counter!

Want to know more about the true value of your home and how much you can expect to make off of the sale?  Give us a call!

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