How the calculation works
Your net proceeds are the cash left after the buyer's money pays off everything attached to the sale:
net proceeds = sale price − mortgage payoff and liens − commissions − transfer tax − concessions − title and attorney fees ± tax proration − prep and moving
- Mortgage payoff can differ from the balance on your last statement, so get the real figure. If you ask your servicer in writing, the CFPB says it generally has seven business days to answer. Home equity lines and other liens are paid off at closing too.
- Commissions are a percentage of the price that you negotiate. NAR states that broker fees are fully negotiable and not set by law.
- Transfer tax depends on where the home is, and who pays it can depend on local custom and your contract. Enter your local rate, or 0 if you are not paying it.
- Property tax proration settles who paid taxes for which days. If taxes for your months are still unpaid, you credit the buyer. If you prepaid past the closing date, the buyer credits you. The property tax proration calculator works out the exact figure.
Worked example
You sell for $650,000 and owe $320,000 on your mortgage. You agreed to 2.5% for your listing agent and 2.5% for the buyer's agent, gave a $5,000 credit after the inspection, and your area charges a 0.4% seller transfer tax.
| Item | Amount |
|---|---|
| Sale price | $650,000 |
| Mortgage payoff | −$320,000 |
| Listing commission (2.5%) | −$16,250 |
| Buyer's agent (2.5%) | −$16,250 |
| Transfer tax (0.4%) | −$2,600 |
| Concession to buyer | −$5,000 |
| Title, escrow and attorney fees | −$3,500 |
| Property tax owed to buyer | −$1,500 |
| Repairs, staging, moving | −$7,000 |
| Net proceeds | $277,900 |
Costs come to $52,100, or 8.0% of the price. Cutting the buyer-agent payment to 2% would add $3,250 to your pocket. A sale price 5% lower ($617,500) is $32,500 less, but the percentage-based costs fall by about $1,755, so your net drops by about $30,745 to $247,155. The table under the results shows this for each price.
Will you owe tax on the profit?
Net proceeds are not the same as profit. The IRS measures gain as the amount realized (price minus selling expenses) minus your adjusted basis (what you paid plus improvements). In the example, gain is about $176,400. If you owned and lived in the home at least two of the last five years, you can generally exclude up to $250,000 of gain, or $500,000 on a joint return. The tool flags when the rough gain is above that limit. Run the home sale capital gains calculator for the full test.
Edge cases
- Underwater sale. If the result is negative, you would have to bring cash to closing or negotiate a short sale with your lender.
- Co-ops and condos may add flip taxes, move-out deposits or managing agent fees. Add them to title and attorney fees.
- Your escrow balance comes back after payoff. The CFPB lists failing to refund escrow money within 20 days of paying off your mortgage in full as a servicer error you can report. It is not included here, so treat it as a small bonus.
What to do next
Selling in New York City? Use the NYC seller net proceeds calculator or the NYC closing cost calculator, which apply city and state transfer taxes. Compare commission offers with the real estate commission calculator and read how commissions work after the NAR settlement.