~3 minute lesson · Beginner · Selling a Home
From sale price to seller net proceeds
The Short Answer
The amount you receive depends on payoffs, negotiated costs, credits, and adjustments.
How It Works
Build a property-specific net sheet
Start with the expected sale price. Subtract mortgage and other lien payoffs, negotiated brokerage compensation, seller credits, escrow and title charges assigned to you, transfer taxes, and applicable adjustments. Local practices differ, and compensation is negotiable; there is no single mandatory commission rate or universal closing-cost percentage.
Use payoff figures, not just balances
A payoff demand can include interest through a particular date and other amounts needed to release the loan. Outstanding association amounts and prorated taxes may also affect proceeds. Ask escrow for an updated estimate as the closing date and agreed terms become clearer.
Keep proceeds separate from tax gain
Illustration: $900,000 price minus $550,000 loan payoff and $45,000 in assumed selling costs and credits leaves $305,000 before other adjustments or withholding. That is cash arithmetic, not taxable gain. Gain depends on tax basis and other rules; the mortgage balance does not determine it.
California Example
A California seller can ask for a net sheet showing the sale price, estimated selling costs, loan payoff, and other adjustments. The result is an estimate of proceeds, not taxable gain.
What to Remember
- Build a property-specific net sheet
- Use payoff figures, not just balances
- Keep proceeds separate from tax gain
Ask for a written net sheet and keep cash proceeds separate from the tax calculation.