First of all, we need to expand on the most important thing about this entire article: Net Proceeds. Simply put, it’s the funds that one should receive after selling something like an asset/s with the costs of other things like expenses, fees, and taxes taken away from the gross proceeds. Gross proceeds are the total fund received.
Why is it important to know the difference between the net proceeds and gross proceeds? Because you’re going to need to consider the costs of other variables like taxes and other expenses for you to come up with a suitable selling price. One particular area where net proceeds shine is when one sells their home.
In this article, we’ll give you a simple way or two to calculate the net proceeds you would receive if you were to sell your home – Which could be as easy as just subtracting all of your other expenses from the gross proceeds.
Finding Net Proceed Calculators Online
With technology being so much more advanced than before, the internet pretty much has everything you would be looking for. If you wouldn’t want to put in extra effort and let machines do it for you instead, then this is probably the best method for you to choose.
All you really have to do with this calculator is put in the values that apply to what you’re selling, especially when you decide to sell your house off-market. Suppose you’re unsure of what values they’re looking for. In that case, there are some brief descriptions of what these values should look like, which makes it way easier to understand for everyone. On the right side of the values, you’ll get your results.
Traditional Method
You can’t get any simpler than just going online to use a calculator that does all the work for you. However, if you still want to get ahead and do all of the math yourself on a spreadsheet, then you’re free to do so. It’s really just a simple matter of total funds minus the sum of extra expenses to get you the net proceeds.
Calculating All Of Your Values
You can’t really do any of the math mentioned before if you don’t have your values, right? First things first, you’re going to need to start with an estimate of how much you think your asset will sell for. You should consider the number of beds and baths you have, the age of your house, the neighborhood it is in, and the land it covers in square feet.
Estimating Your Property’s Cost
Again, this is the very first step you’re going to want to take before actually slapping on a price on your property. Although it is an estimated value, don’t treat this as just a random guess; instead, turn it into an educated guess, like using other properties on sale online as a comparison to your own.
Suppose a recently sold home has around the same values as your own home – in regards to the land it covers, the number of rooms, the age of the house, the condition it’s in, and the neighborhood its located in, then the price it was sold for should be similar to what value you want. The more you find multiple houses that fit the same descriptions, the better.
Calculate Seller Concessions
After you’ve made a safe estimate, you’re going to want to start considering subtracting all of the other expenses from that estimate. Firstly, seller concessions. A seller concession is basically a price reduction(around 1.5-2%) for things like necessary repairs. Typical seller concessions could be things like drainage problems and/or wildlife issues.
Calculate Transaction Costs
Nothing is free, more so when it comes to real estate transactions. It’ll be hard for you to get your property sold without the help of a hired real estate agent, and let me tell you, their fees don’t come cheap – around 6-9% of the original selling price. Don’t forget about the closing costs you’re going to need to include in your calculations, which could be an extra 2-3%.
Calculate Holding Costs
Holding costs is basically what you have to still pay for while your house is on the market. Don’t think that you have a get-out-of-mortgage-for-free card just because you put your property for sale. Your property will be on the market for a while, so you’re going to need to give an estimate of your holding costs during the timespan that your house is still sold.
Takeaway
There are other things that you need to subtract from your overall estimate, like mortgages and debts that you still have to pay off. Still, those three are the main ones you would need to calculate to find your net proceeds. There are also soft costs like keeping the house clean to keep the house sparkling whenever potential buyers ask for a showing!
