How Much Money Will I Actually Make When I Sell My House?
The amount you actually make when you sell your house is not the same as your sale price. What matters is your net proceeds: the money left after your mortgage and other liens are paid off and the expenses connected with the sale are deducted.
A simple way to think about it is:
Sale Price − Mortgage Payoff − Selling Costs − Other Amounts Due = Estimated Net Proceeds
That sounds straightforward, but each part can change. Your final proceeds can be affected by the price you accept, your mortgage balance, broker compensation, negotiated buyer costs, repairs, taxes, title and closing expenses, and the specific terms of your purchase agreement.
If you're selling a home in Minnesota, getting a realistic estimate before you list is much more useful than simply knowing what your house might sell for.
What Does “Net Proceeds” Mean When Selling a House?
Your net proceeds are the amount of money you receive from the sale after the expenses and obligations associated with the property and transaction have been paid.
For example, imagine a homeowner sells for $350,000. That does not mean the seller walks away with $350,000. If there is still $180,000 owed on the mortgage, that balance generally needs to be paid off at closing. Selling expenses and any other amounts due are then deducted as well.
The remaining amount is much closer to the number sellers really care about.
This is also why two homeowners who sell identical houses for exactly the same price could receive very different amounts at closing. One may have owned the home for 20 years and owe very little. The other may have purchased recently and still have a substantial mortgage balance.
How Do I Estimate How Much I'll Make When I Sell My House?
Start with four numbers:
Your realistic expected sale price
Your current mortgage payoff
Your estimated selling and closing costs
Any additional expenses or credits that will come out of your proceeds
Then subtract numbers 2 through 4 from number 1.
The key word here is realistic. Using the highest price you hope to receive and subtracting the balance shown on your latest mortgage statement can give you a very misleading estimate.
Start With a Realistic Sale Price
Before you can estimate what you'll make, you need a reasonable idea of what the property could sell for.
That means looking at more than an online home-value estimate. The home's location, condition, size, features, improvements, recent comparable sales and current competition can all matter.
In East Central Minnesota, property characteristics can also vary considerably. A home in Cambridge or Isanti may not be directly comparable to an acreage property farther outside town simply because the houses have similar square footage.
Pricing is also connected to your eventual proceeds in ways sellers sometimes overlook. A strong pricing strategy isn't simply about choosing the largest possible number. It's about positioning the property appropriately for the buyers who are actually comparing homes like yours.
Amy's own seller process begins with reviewing the market analysis, evaluating the property and local market information, and then establishing the sale price.
Get the Actual Mortgage Payoff
Your mortgage payoff is not necessarily identical to the principal balance you see when you log into your mortgage account.
A payoff statement is calculated for a specific date and can include interest and other amounts owed under your loan. If you have more than one loan secured by the property, such as a second mortgage or home equity loan, those obligations may also need to be accounted for.
Early in Amy's seller preparation process, one of the questions she asks is how much the homeowner currently owes on the mortgage.
For an early estimate, your current loan balance gives you a starting point. As you get closer to closing, the title or closing professionals can work with the appropriate parties to determine the actual payoff amounts.
What Costs Come Out of a Home Seller's Proceeds in Minnesota?
There isn't one universal percentage you can subtract from every Minnesota home sale. Some costs are based on the property's sale price, while others depend on the services used, the contract and what you negotiate with the buyer.
Your transaction may include expenses such as:
Mortgage and other lien payoffs
Brokerage compensation
Minnesota deed tax
Title and closing-related charges
Property tax adjustments or other property-related amounts
Seller-paid buyer costs or concessions, if negotiated
Repair credits or other negotiated expenses
Other property- or transaction-specific charges
Minnesota law specifically requires real estate licensees to disclose that buyers or sellers may have closing costs that can reduce the seller's proceeds. When the listing broker or designee is acting as the closing agent, Minnesota law also requires a detailed closing statement showing receipts and disbursements handled for the seller.
Minnesota Deed Tax
One Minnesota-specific expense sellers should understand is deed tax.
The Minnesota Department of Revenue states that the general deed tax rate is 0.0033 of the net consideration, with a different rate applying in Hennepin and Ramsey counties. The calculation can become more complicated in transactions involving assumed liens or other unusual circumstances.
For a straightforward example, applying 0.0033 to $350,000 produces a deed tax calculation of $1,155.
That example is for explanation only. The actual calculation for your sale should be based on your specific transaction.
Real Estate Broker Compensation
Broker compensation should not simply be plugged into your estimate using an assumed “standard commission.”
Broker compensation is negotiable and is not set by law. Current REALTOR® rules also require sellers to approve in writing certain payments or offers of payment that a listing broker or seller will make to a broker or agent representing a buyer.
A seller can also choose whether to offer compensation toward a buyer's agent. That is not mandatory, and the options should be discussed as part of the seller's overall strategy.
So when estimating your proceeds, use the compensation terms you actually agree to rather than assuming a fixed percentage.
Seller Concessions
A buyer may ask you to contribute toward certain costs as part of the purchase agreement. These are commonly referred to as seller concessions.
A concession is negotiated. You don't automatically owe a buyer a particular amount simply because you're selling your home. If you agree to one, however, it can reduce what you receive from the sale.
This is one reason the highest offer isn't automatically the offer that produces the most money for the seller.
The Highest Offer May Not Give You the Highest Net Proceeds
Here's where sellers can get tripped up.
Imagine you receive two offers:
Offer A: $360,000 with a substantial seller concession.
Offer B: $355,000 with a smaller concession and different terms.
Looking only at the purchase price, Offer A appears better.
But you haven't compared what each offer would actually leave you with.
Price matters, of course. So do the financial terms of the offer, requested concessions and other obligations you're agreeing to take on.
There are nonfinancial considerations, too. Financing, contingencies, inspection terms, appraisal considerations and the proposed closing date can affect the strength and practicality of an offer.
That's why an offer should be reviewed as a package rather than reduced to one number. Amy's seller process includes reviewing offers, negotiating terms and addressing multiple-offer situations when necessary.
Don't Confuse Home Equity, Profit and Net Proceeds
These three terms often get mixed together.
Equity is generally the difference between what your home is worth and what you owe against it.
Net proceeds are the dollars left from the transaction after applicable mortgage payoffs and selling expenses are deducted.
Profit or capital gain is a different calculation, particularly for tax purposes.
Here's a simple illustration.
Suppose your home sells for $375,000 and your mortgage payoff is $190,000.
That leaves $185,000 before selling expenses.
Now suppose, purely for illustration, that the total applicable selling expenses and other deductions from your proceeds were $25,000.
Your estimated net proceeds would then be:
$375,000 − $190,000 − $25,000 = $160,000
That does not automatically mean you made a $160,000 taxable profit.
For tax purposes, determining your gain involves additional calculations, including your adjusted basis and qualifying selling expenses. The IRS provides separate rules for calculating gain on the sale of a home.
Will I Have to Pay Capital Gains Tax When I Sell My House?
Not necessarily.
Under current federal tax rules, qualifying homeowners may be able to exclude up to $250,000 of gain from the sale of a main home, or up to $500,000 for certain married couples filing jointly.
Generally, eligibility for the full exclusion includes ownership and residence requirements. The IRS states that a homeowner generally must have owned the home and used it as a main residence for at least two of the five years preceding the sale. Other requirements and exceptions can apply.
Notice that the rule applies to your gain, not simply the check you receive at closing.
Your situation may also be different if the property was used as a rental, had business use, was inherited, was acquired through certain exchanges or has other tax considerations.
This is one area where your REALTOR® can help you understand the real estate side of the transaction, but tax questions should be confirmed with a qualified tax professional.
Where Sellers Get Tripped Up When Estimating Their Proceeds
One of the biggest mistakes is doing this:
Expected Sale Price − Current Mortgage Balance = What I'll Make
That leaves too much out.
Another common mistake is making plans for every dollar of an estimated sale price before an offer has even been accepted.
Until you have an actual purchase agreement, some important numbers are still moving. Your final price hasn't been established. You don't know exactly what a buyer might request. An inspection could lead to additional negotiations. The appraisal and other contingencies may still need to be completed.
Amy's selling process reflects that sequence: offers and terms are negotiated first, followed by steps that may include inspections, repair negotiations, the buyer's financing, appraisal and removal of contingencies before closing.
A preliminary net sheet is useful for planning. It isn't a promise of exactly what will be deposited into your bank account.
A Practical East Central Minnesota Example
Consider a homeowner in Cambridge who is thinking about selling and wants to know whether the proceeds will be enough for the next move.
Instead of beginning with, “My neighbor sold for $400,000, so I'll probably have about $400,000,” start with the property itself.
First, establish a reasonable price range based on the home and relevant comparable properties. Then determine the approximate mortgage payoff. From there, estimate the expenses that would apply to the sale.
You can then run more than one scenario.
For example:
If the home sells for $X: estimated proceeds are approximately $Y.
If the home sells for $X but the accepted offer includes $Z in seller concessions: estimated proceeds change to approximately $Y.
If negotiations after inspection result in a credit: update the estimate again.
That gives the homeowner something much more useful than a home-value estimate: a working picture of the money potentially available after the sale.
For someone trying to coordinate the sale of one house with the purchase of another, that number can affect the down payment, financing, moving budget and timing of the next purchase.
How Can I Get a More Accurate Estimate Before I List?
Ask for an estimated seller net sheet based on your property and expected sale price.
The estimate should account for the major expenses that are reasonably known at that point. You can also run several potential sale prices instead of relying on a single number.
For example, it may be helpful to see estimated proceeds at three different price points. That makes it easier to understand what a $5,000 or $10,000 change in the eventual sale price actually means to you after the other expenses are considered.
Also tell your REALTOR® what you need from the sale.
That's different from saying, “I need my house to sell for $400,000.”
If your real concern is that you need a certain amount available for the down payment on your next home, say that. Amy specifically asks sellers to think about what they hope to net from the sale before discussing their next steps.
That information doesn't determine what the market will pay for your house. It does help everyone plan around the number that actually matters to you.
Frequently Asked Questions
How much money do I get to keep when I sell my house?
You keep the net proceeds remaining after your mortgage and other applicable liens are paid and the costs associated with your sale are deducted. Your sale price alone cannot tell you how much you'll receive.
Do I have to pay off my mortgage when I sell my house?
In a typical sale, an existing mortgage secured by the property is paid from the transaction so the property can be transferred according to the terms of the sale. If you have additional liens or loans secured by the property, those need to be identified as well. Your closing or title professional can provide the exact amounts applicable to your transaction.
Are REALTOR® commissions a fixed percentage in Minnesota?
No. Broker compensation is not set by law and is negotiable. The compensation arrangements applicable to your sale should be discussed clearly before you sign your listing agreement.
Will I know exactly how much I'm getting before closing?
Your estimated proceeds can become increasingly accurate as the transaction progresses. The final closing figures account for the actual receipts, disbursements, payoffs and applicable transaction expenses. Minnesota law provides for a detailed closing statement when the listing broker or designee acts as the transaction closing agent.
Is the money I receive at closing the same as my taxable gain?
No. Net sale proceeds and taxable gain are different calculations. The IRS uses rules involving your adjusted basis, selling price, qualifying expenses and available exclusions to determine taxable gain. A tax professional can help determine how those rules apply to your specific situation.
Know Your Net Before You Make Plans
The sale price gets most of the attention, but the net proceeds are what ultimately matter to you.
Before listing your Minnesota home, get a realistic idea of its potential selling price, find out approximately what you owe, identify the likely expenses and look at what could reasonably be left after the sale. Then keep updating that estimate as real numbers replace estimates.
Amy Grafenstein has been helping Minnesota buyers and sellers since 2001, and understanding what a seller hopes to net is part of her preparation before a home reaches the market.
Let’s Talk
If you're considering selling in East Central Minnesota and want to understand what your sale could actually mean financially, Amy can help you work through the real estate numbers and prepare a realistic estimate.
Amy Grafenstein, REALTOR®
RE/MAX Results
Call or Text: 612-363-0934
Email: [email protected]
Website: amygrafenstein.com
