Despite rising interest rates and creeping inflation, the housing market continues to enjoy favorable pricing, largely due to low inventory. Reuters calculated that the median price of new homes increased 21.4% in March from the previous year – resulting in homeowners asking the question: Is this a good time to sell my home?
Once you determine that now is a good time to move, you may be wondering how much your home is worth and what your net profit will be. Here is a guide to help you understand and answer some of those questions.
How much profit will I make selling my house?
To answer this question, you first need to understand the difference between net proceeds and profit.
Net proceeds represent the final amount of money a seller receives from selling a home after expenses (like commission, repairs, inspection costs, transfer fees, mortgage balance payoff, etc.) are subtracted.
Profit adds the initial purchase price of your home into the calculation. The original purchase price determines your profit, not your mortgage balance. This is because the mortgage balance does not account for the down payment or refinancing. To determine profit, subtract the original purchase price plus all costs and fees listed above from the final sale price.
How do I estimate net proceeds from my home sale?
The basic equation that a net proceeds calculator uses is:
Your home’s sale price – any mortgage payoff amount – your costs = estimated net proceeds
What costs can I expect to pay on my home sale?
Let’s take a closer look at the elements of the home sale net proceeds equation. Here is a list of some typical costs, what they are, and the anticipated costs of them.
- Home sale price: This is the amount written on the final sales contract.
- Real estate agent commission or fees: Agent commissions include both the buyer’s and seller’s agent and they average 5.8% of the sale price of the home.
- Mortgage payoff amount: The amount you must pay to satisfy the terms of your loan to completely pay off the debt.
- Home repair costs: The cost of any work done on your home in order to sell it.
- Staging costs: Staging fees generally account for 1%-4% of the home’s sale price. This could include cleaning, painting, decluttering, etc.
- Seller concessions: These are incentives to encourage buyers to close the deal. This could include performing repairs, offering warranties, or offering closing cost credits. Seller concessions can amount to as much as 2%-6%.
- Homeownership overlap costs: Overlap costs can include mortgage payments on your unsold home, utilities, pro-rated taxes, and insurance. They generally amount to 1%-2% of the sale price.
- Closing costs: These include title fees, taxes, and escrow and they often amount to 1%-3% of the sale price.
How long do you need to be in a house to make money?
Today, appreciation is the key. In 2022, the average appreciation rate is 14.5%, a significant increase since 2019, when it was 4%. Supply and demand greatly impact appreciation, but the home’s conditions and local comparable properties will also impact its value.
How much can I sell my house for?
The first step in estimating your net proceeds is estimating how much your home is worth. Find a trusted real estate agent to help you determine your home’s worth using local market knowledge and a comparative market analysis. Team Melton has over 50 combined years of real estate experience to assist you through every step of the process. Contact us today to get started on selling your home!