If your house sells for $500,000, you’re not going to receive a $500,000 check at settlement.
The sale price is an important number, but for a homeowner considering selling, another number may be even more useful:
How much might I actually walk away with?
That’s one reason I like to prepare an estimated seller net sheet when I’m discussing pricing with a homeowner.
What Does That Look Like in Real Numbers?
Here’s one real-world example. On a $555,000 Philadelphia sale, the estimated seller closing charges totaled about $32,800 — just under 6% of the sale price.
That included the seller’s portion of transfer tax, negotiated brokerage compensation, and several smaller transaction expenses. The seller also received a property-tax credit at settlement, which reduced the overall impact of those charges.
The seller’s mortgage payoff was separate. A mortgage reduces how much money you walk away with, but I don’t consider paying off your existing loan a cost created by selling the house.
Your actual costs could be higher or lower. Brokerage compensation is negotiable, taxes and settlement expenses vary, and seller credits or property-specific issues can change the final numbers.
That’s why I prepare an estimated seller net sheet. The sale price tells you what the house sold for. The net sheet helps tell you what you may actually walk away with.
Start With the Expected Sale Price
A seller net sheet starts with a possible sale price and works backward to estimate the seller’s proceeds.
If there’s a mortgage on the property, the remaining mortgage balance generally has to be paid from the proceeds.
Then there are expenses associated with the transaction.
Depending on the property and transaction, those may include transfer tax, negotiated brokerage compensation, settlement-related charges, certifications, negotiated seller credits and other property-specific expenses.
The exact numbers vary from one sale to another.
Some Money May Come Back to the Seller
A settlement statement isn’t necessarily a list of money going in only one direction.
There may also be prorations or credits back to the seller.
Property taxes are one example.
If taxes have already been paid for a period during which the buyer will own the property, the appropriate portion may be prorated between buyer and seller at settlement.
That credit can increase the seller’s proceeds.
Then There Are the Property-Specific Items
Individual properties can bring their own expenses.
There may be final utility balances, municipal certifications, condominium or association balances, assessments or other items that need to be addressed.
These are among the reasons I don’t like reducing the cost of selling a house to one universal percentage.
Every transaction is different.
The “Uh-Oh” Category: Liens and Judgments
Title work can occasionally uncover something a homeowner wasn’t expecting.
Liens or judgments may need to be addressed before clear title can be transferred.
I’ve seen a transaction in which a judgment of more than $24,000 appeared on the settlement statement and had to be accounted for in the seller’s proceeds.
That’s the kind of information that’s much better to uncover and understand before you’ve made plans based on an expected amount of money from the sale.
Why Estimate the Numbers Before Listing?
When I’m helping a homeowner think about pricing, I don’t want the conversation to end with:
“Here’s approximately what your house could sell for.”
I also want to help answer:
“If it sells around that number, what might I actually walk away with?”
The seller net sheet is still an estimate.
Mortgage payoff amounts can change. Settlement dates affect prorations. Negotiations during the transaction can change costs or credits. Unexpected title or property issues can also affect the final numbers.
But an informed estimate gives the homeowner something much more useful than the sale price alone.
One of my favorite things at settlement is comparing the final settlement statement with the estimate I prepared at the beginning of the process. I like getting those numbers as close as reasonably possible.
The Sale Price Is Only Part of the Decision
Your expected net proceeds may affect what you decide to do next.
Perhaps you’re buying another home.
Perhaps you’re downsizing.
Perhaps you’re considering another type of housing.
Or perhaps you’re trying to determine whether selling makes financial sense at all.
That’s why I believe it’s useful to understand the numbers before making the decision.
Have questions?
Whether you’re buying, selling, downsizing, helping an aging parent, or just trying to understand your options, I’m happy to help.