When a homeowner thinks about selling their house, they want to know how much money they could make. Although it’s one of the most common questions, there’s no easy answer. The money a home clears when it sells depends on several factors. Let’s look at the biggest things that impact how much a seller can make on their home.
The Home’s Selling Price
The more a property sells for, the more money the seller stands to make. If the house goes up for sale during a hot seller’s market, it will probably bring a top-dollar price. If a bidding war ensues, and many have over the past few years, your house may even sell for more than you’re asking for it.
However, if a seller puts it on the market during a housing slump, or when interest rates have recently increased, there may not be as much interest in the property. This situation could cause the offers to come in lower.
The Home’s Condition
Many of today’s homebuyers aren’t “handy” or they don’t have the time to devote to large, sweeping renovations. A move-in-ready house is typically more attractive to a larger number of buyers, which helps it bring a higher price.
If your home is outdated or needs significant repairs, you probably won’t be able to sell it for a premium price.
How Much You Still Owe on the Mortgage
Another key piece of information that influences how much you can make on selling your home is how much you still owe on it. The less you owe, the better. If you paid a large down payment and have been in your home at least five years, you’ve probably paid down a significant chunk of your mortgage loan. When you sell, the price you get for it will most likely be quite a bit more than your loan balance.
On the other hand, if you didn’t pay much down and have only lived in the house two or three years, you most likely have a mortgage loan that is close to the amount you can sell the home for. In this case, you’ll make little, if any, off the sale.
Who Handles the Closing Costs
Closing costs can be a hefty part of selling a home. If you agree to pay them, this cuts into how much you make on selling your home. If the buyer pays them, then the closing costs won’t affect how much you make.
Real Estate Agent Commissions
A real estate agent typically gets paid a percentage of the selling price. If what you’re selling the house for isn’t much more than what you owe on it, the agent commissions can cut into how much you make off the sale.
Talk to MIG about your next mortgage loan or refinance. We can lay out your options and help you make the best decision.