How much money do you get when you sell your home?

When you sell your home, you are probably hoping to make some money. But before you start calculating what you will make on the sale, it’s important to understand what it will cost you: There are a variety of costs associated with selling your house, and you don’t just pocket the full amount of the sale price. Here’s more about how to calculate your potential profit on a home sale.

If I sell my house, how much do I keep?

The total amount of your home’s sale price is not the same as your net proceeds from the sale. Quite the opposite, in fact — you definitely won’t keep that full amount, and the amount you do keep will vary greatly depending on a wide variety of factors. It may be useful to think of it more in terms of what you need to pay, rather than what you get to keep.

Average costs to sell a house

With a traditional home sale, the seller’s biggest cost will likely be real estate agent commission fees. It typically falls to the seller to pay both their own agent and the buyer’s agent (though that may change if a recent lawsuit regarding commissions is successful).

• Commissions: The average real estate commission is between 5 and 6 percent of the home’s sale price. So, if you sell your home for $400,000, you would likely pay commissions totaling somewhere between $20,000 and $24,000.

On top of agent fees, there are a wide variety of expenses that the seller may pay as they prepare their home for the market. Some optional costs sellers often choose to make their home more appealing to buyers include:

• Staging: Hiring a professional home stager can help make your home more attractive to buyers, especially if it’s cluttered from years of living there — or empty because you’ve already moved out. In a recent National Association of Realtors study, 20 percent of buyers’ agents said that home staging increased the amount of money offered for a home.
• Pre-listing inspection: While getting your home inspected before listing it for sale is optional, it can still be a good idea. If you learn about issues and fix them before putting your home on the market, that reduces the odds of a buyer being turned off by them. The inspection will likely cost a few hundred dollars. Keep in mind that if your inspection reveals material defects with your home, you may have a responsibility to disclose them to a buyer, depending on your state’s disclosure laws.
• Repairs: You might want to repair that leaky faucet or squeaky floorboard before you list, to avoid giving buyers a bad impression. And bigger repairs can really set you back financially, so be prepared for them before you decide to sell, especially if you expect problems might be revealed during a home inspection.

In a real estate transaction, many closing costs are the buyer’s responsibility. But there are closing costs for sellers, as well. Some common closing costs you can expect to pay include:

• Mortgage payoff: Do you still have a mortgage on the home you’re selling? How much it will cost to pay that off depends entirely on your outstanding balance, and the amount will come out of the proceeds of the sale. For example, if you sell your home for $500,000 but you still owe $300,000 on your mortgage, you’ll have to give $300,000 right back to the lender. Prorated interest accrued will likely be added, too, and you might also be charged a wire transfer fee.
• Transfer taxes: Most states levy a tax to transfer ownership of the home from you to the new owner. The transfer tax rate will depend on the location of your home.
• Prorated property taxes: As a homeowner, you’re responsible for property taxes for the entire duration of your ownership, right up until closing day. The same goes for HOA fees if the property is part of a homeowners association.
• Title-related fees: Sellers often pay for the title search and title insurance policy, both of which relate to ownership and whether anyone else has a claim to the property. The cost, and who pays, varies by location and can often be negotiated.
• Legal fees: Many states actually require you to hire a real estate attorney to sell a home. However, even if your state is not one of them, it’s smart to have a legal expert review the transaction to make sure your interests are fully covered.
• Moving costs: This is not a closing cost, per se, but it’s still an expense that all sellers should factor into their budget. The cost to move all your belongings from your old house to your new one will be cheaper in the off-season that it will in summer, and will be much more expensive for a long-distance move than it will for a local one. If you need to store your stuff in transition, that will be an extra cost as well.

Selling your home for more than you bought it for

Add up all the costs above for your home sale, and subtract the total from your final sale price. Whatever is left is your take-home profit. This amount can vary greatly from one sale to the next and depends a lot on how much you still owe on your mortgage. In 2023, the typical U.S. home seller made a profit of $121,000, according to a recent report by ATTOM Data Solutions.

If you’ve made a really significant profit — double the average or more — you may also be responsible for capital gains taxes. If this is the case, you will need to account for that amount, too, in order to determine your net proceeds.

Do you get all the money at once?

Typically, the buyer’s money for the sale is due at closing. The agent’s fees and closing costs are paid out from that, as is the mortgage payoff. The net proceeds are then paid to the seller.

The buyer can usually provide the money via cashier’s check or wire transfer. Depending on how they pay and the closing process in your state, it could take anywhere from 24 hours to several days for you to receive your share of the money.

Example: If I sell my home for $400K, how much do I get?

Let’s say you’ve sold your home for $400,000, and you still owe $200,000 on the mortgage. Assuming the selling expenses below, here’s how much you can expect to make in the end.

Be prepared for the holding costs

Even if you’ve already moved out and your home is vacant, you will still need to foot the bill for the typical costs of homeownership until closing is complete. These are called the holding costs. Holding costs include expenses like utilities and basic maintenance — you will need to keep paying these costs until the sale is final and ownership transfers to the buyer. Make sure you budget for them as you prepare to sell the property.

Next steps

There’s a lot to keep track of when selling your home, and professional help can be invaluable. Hire a real estate agent who knows your area well to help guide you through the process. A licensed agent can give you advice every step of the way, from pricing your home correctly all the way through closing.

FAQs

• How does selling my home after two years impact my profits?

  It’s all about capital gains taxes. If the home has served as your primary residence for at least two out of the past five years, the IRS allows you to exempt a significant amount of profit — however, if you sell before that, your profit will be taxable. So, if you’ve owned your home for two years or more, you’re less likely to have to pay the IRS.
  

• What are my net proceeds if I sell my house for $300K?

  Net proceeds from a home sale are the total amount of money you walk away with after paying off the existing mortgage, closing costs and any other associated fees. This will be different for every home seller, even if they sell their home for the same price. If you sell your house for $300K, you will need to add up your closing costs, mortgage payoff amount, Realtor commissions and other fees, then subtract that total from $300K to determine your net proceeds.
  

• What are the primary fees when selling my home?

  There are a number of fees associated with selling a home. The largest cost will likely be real estate agent commissions, which are paid by the seller and usually amount to between 5 and 6 percent of the sale price. If you sell your home for $300,000, a 5.5 percent commission comes to $16,500.