Net proceeds is the amount of money you’ll walk away with after the sale of your home, once you deduct all of the sale costs. Seller closing costs typically include real estate agent commissions, title insurance, escrow fees, and wire fees. In addition to these expenses, you may have other fees as a seller depending on where your property is located.
To calculate the net proceeds of your home sale, you’ll need to deduct all of your closing costs and the mortgage balance from the final sale price of your home. On average, seller closing costs add up to 5-6% of the sale price.
Here is a break down of who usually pays for what the sale of a home and what the fees actually are.
Natural Hazard Disclosure Report: Seller
This is a repost that determines if the home is in a designated natural hazard zone. AKA earthquake fault, seismic hazard area, seasonal flooding, or wildfires.
Smoke Detectors, CO Detectors, Water Heater Bracing: Seller
The lender requires smoke detectors and CO2 detectors in the home. For Earthquake purposes the Lender also requires 2 metal braces to hold the water tank in place. This must be done by a contractor so its done properly.
Escrow Fees: buyer and seller pay their own.
These fees are paid to the escrow company. Escrow protects both the buyer and the seller throughout the process. This fees pays the company that will be managing the documents and making sure everyone agrees to the terms and hold the money in a third party account until it needs to be distributed.
Title Insurance policy: Seller
Is an insurance policy that covers you and your lender are protected against any financial loss or title issues due to liens, disputes between prior owners, clerical problems in the court house, forged signatures or fraud claims.
County Tax Transfer Fee: Seller
Its transferring the buyers name to the county and removing the seller from the county. In CA it is $.55 per $500.
City Tax Transfer Fee: Seller
City transfer tax is the same as above but not all cities have a transfer tax fee. Most just use the county records.
HOA Docs Fee: Seller
Seller will pay for the preparation fo HOA docs to be delivered to the seller.
HOA Transfer Fee: Seller
This is a one time fee like the county and city transfer fee that the seller pays to remove their name from documents and adds the buyers name instead.
Private Transfer Fee: Buyer
A private transfer fee is some specific to a community. As in Ladera Ranch, CA they have a fee that the buyer is to pay 1/4 of 1% of the purchase price to the community. Everyone calls it the fireworks tax. This fee is used to host community events, fireworks on the forth of July and so forth.
Home Warranty Plan: Seller
Seller usually pays for the first year of a home warranty plan. This plan covers service, repairs, or replacements of appliances or major home systems. It is up to the buyer after the 1st year if they want to continue with the warranty or get rid of it.
Commission: Seller
Commission is paying the selling agent and buying agent for their time in helping sell your home. There are fees that the selling agent incurs when listing a home on the MLS. This fee also covers the time that the agent is spending marketing, holding open houses, and working when the home is under contact. Agents are only paid by commission.
Here is an example of how to calculate how much you’ll make from a home sale (net proceeds):
Let’s say you sold your home for $1,000,000. You have a mortgage balance of $500,000 that you’ll need to pay off, and your total closing costs add up to a total of $55,000. After deducting these costs from the final sale price, you’ll be left with net proceeds of $455,000.
Your agent and lender can and should provide you with a net sheet of costs and what you will bring home after the deal closes.
If you are interested in selling your home, I’d love to walk you through the process and answer any questions you might have! Send me a DM!