Home Selling in Marshville>Question Details

Elmomehl, Home Seller in Marshville, NC

what is the formula to calculate the asking price for a home to ensure that I get the net profit I need after paying commission & closing?

Asked by Elmomehl, Marshville, NC Wed Jun 29, 2011

cost fees. I just need to break even on my house after i pay everyone their part.

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6
Elmomehl,
Your agent can prepare an “estimated net proceeds worksheet” which will breakdown the commissions and sellers closing costs assuming whatever selling price makes sense.
Unfortunately pricing a home this way seldom works. You may sell too low, leaving money on the table... Good for the buyer. Or price too high strictly based on what you need. Buyers don't care how much you need; they only care about what they need.
Have some agents prepare a comparative market analysis along with the net proceeds worksheet based on their estimates and base your pricing on what the market data indicates and your agent advises.
1 vote Thank Flag Link Wed Jun 29, 2011
Two Questions: FIRST: How much do you own the bank on your mortgage? This is called your Payoff Amount, you can call your bank to find out the amount. SECOND: How much commission are you paying your agent and the buyer agent?

Here is basically how the NET TO SELLER works:
________________________________________________

Seller's Sales Price: $100,000

Amount of Commission @ 6-percent = $6,000

Recording Fees / Attorney Fees: $400 *you need to find out how much you will be charge, this is approximate.

Seller's NET: $93,600.

Seller's Mortgage Payoff: (How much do you owe the bank?) If it is $93,600.

Sellers Final Net: ZERO


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0 votes Thank Flag Link Thu Jun 30, 2011
You will need to know what the outstanding balance is on your mortgage. Keep in mind that each month that you make a payment you will owe a little less (depending on the amount of principle you pay down each month).

You should also talk to the attorney that you will be using for closing. They will be able to give you a good idea of what the fees that you will be paying for at closing will cost you.

Once you have all this information, you can use the worksheets that others have mentioned. However, I have found some limitations... After you add up your expenses (your closing costs and your mortgage payoff amount), you will need to calculate the commissions that you will pay to both the Listing Agent and the Buyer's Agent (at least take into consideration the cost of a Buyer's Agent since a buyer wanting to see your house might already be working with an agent) and the asking price that you will need to put on your house to breakeven. Since the commissions are based on the selling price, they will change every time your change the selling price. You can get really close by using a formula such as your total expenses divided by 1 plus the commission % for both agents. However, since my background is in accounting, I like to have an exact number... In my case I use a spreadsheet to solve this for me.

As others have mentioned, you will also need to take into consideration the ask/sell ratio for your area as well as the current market value. If your house is worth more than what you need to breakeven, you don't want to price it at the exact amount that you need as chances are that any offers that come in will be below your asking price. However, you also don't want to price it higher than the current market value or your chance of getting any offers is going to be slim.

Best of luck!
Tanya Donaghy
Solutions Realty
0 votes Thank Flag Link Thu Jun 30, 2011
I would agree with all these answers however Dan Tabit's answer is the most in depth. The only thing I would add to his answer is that you need to also factor for the ask/sell ratio for your area. Each agent has their own average asking price to sales price ratio based on their negotiating skills.

An agent should be able to give you this information when you are speaking with them.

Brian Haigler
Keller Williams Realty
http://www.HomeWithBrian.com
0 votes Thank Flag Link Wed Jun 29, 2011
What you need is a Seller Net Sheet. Chicago Title has a good one if you want to try yourself - If you don't have a Realtor yet, we'd be glad to help you calculate this or discuss selling options if you contact us.
0 votes Thank Flag Link Wed Jun 29, 2011
Hi Elmomehl,

Ask your Realtor to do an Estimated Net Sellers Proceed sheet or ask escrow for an Estimated HUD-1 statement.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Wed Jun 29, 2011
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