Home Sellers Need to Understand Gross vs Net Numbers When Selling A House

Home Sellers Need to Understand Gross vs Net Numbers When Selling A House
Video Transcription

A lot of agents, a lot of appraisers, and a lot of sellers seem to think in gross numbers and not NET numbers. And those two numbers are drastically different.

When an agent says that they can list a house, they’re talking gross numbers. When an appraiser says your house is worth X number of dollars, they’re talking gross numbers.

But quite frankly, that is not realistically what a person will net if they want to sell a house. If they don’t care about selling their house, it doesn’t matter.  But if they want to sell the house, they have to think in net numbers, and about realistic net numbers.

So when a person sells a house, there’s always the typical transaction costs that go into selling a house. There’s always a marketing cost. Whether a person uses an agent or not, they have to find a buyer. There’s the transaction cost of a closing agent, or closing company, title insurance, a title closing fee, the pest inspection, the recording fees at the courthouse. And some states are more or less than other states.

And there is the reality that typically, a buyer will not pay asking price. They always want a deal. I’m sure when people bought their house, they wanted a deal.

And most buyers, especially first-time home buyers will get a government-backed loan, an FHA or a VA loan. And although a seller doesn’t have to pay the closing cost, most of the time, a buyer will always want a seller to pay for those closing costs. And that’s all negotiable. But again, that all plays a role into the transaction costs.

And so what I’ve found is that most times, a seller will only net 80% to 90%, at best, of whatever that gross sales price is. And a lot of sellers don’t realize this until they’re at the closing table, looking at the numbers, and by then, it’s too late to turn back, typically. So education is a lot of the reality is of selling a house.

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