One of the first things you may ask as a homeowner who is thinking about selling is “how much is my home worth?” because ultimately, you want to know how much money you’ll be taking home when you get to the closing table.
, but a comparative market analysis will only go so far (and won’t tell you how much money you will actually walk away with).
As you consider selling your home, be sure to ask your real estate agent to take a deeper look than simply calculating your home's value. You'll want to determine the cash value of your home which will get you closer to knowing how much you'll walk away with when your home sells. There are a number of factors that go into this, however, it is determined in part by the remainder of your current home's mortgage and your home's listing price.
We'll take a close look at market activity, how much money you still owe on your mortgage, and your taxes to determine the cash value. In other words, this is a more accurate estimate of how much money you will actually make on your home sale.
Another factor that most homeowners typically don’t consider when calculating their profit is closing costs. Closing costs are all of the fees and expenses that come with selling your home. These costs are typically around 6-10% of your sale price and can include the following:
- Commission: A fee you pay to your Realtor for their services
- Transfer taxes: The tax that is paid when the title of a property is transferred to someone else
- Loan payoff costs: The amount you have to pay to satisfy your current mortgage loan
- Title insurance fees: This is the cost of the homeowner’s policy which is protected until your loan is paid off or refinanced
- Attorney fees: These are the fees paid to your attorney during the sale or purchase of a home which often protects you and helps you make decisions and resolve issues during the transaction
If you decided to put some money into your home before listing it to increase its value, this cost might indirectly affect how much money you take home. Projects like updating your kitchen or bathrooms, painting the walls, or getting your AC replaced will likely have a positive impact on how much your home is worth but won't be included in an online home value estimate calculation.
As you can see, there are a lot of different factors that go into the profit of a home sale, so while knowing the estimated value of your home is important, your bottom line includes a lot of variables. If you're like us, before making a big financial decision, you want to understand all of the numbers specific to your situation. We know selling your home comes with a lot of questions and we're here to help.