Determining your estimated net proceeds can be a moving target. The final sale price can change, if the sale date changes, the final interest and tax payment can change, and all those numbers can be confusing to begin with.
When you receive an estimated net proceeds statement take a few moments to really look it over to understand all the different components:
- Sale Price – This is the estimated final sales price and gross proceeds. Of course, until the transaction closes, this may adjust.
- Mortgage Payoff – If you have a mortgage on your home, this will be paid off with the proceeds from the sale. However, depending on the date of the closing, the amount of interest and principal remaining may adjust.
- Property Taxes – Your prorated amount of property tax will be paid out of closing.
- Municipal Utilities – Depending on the area, these may be paid out of closing.
- Commission – Both the listing and selling agent commission will be paid out of closing. They will pay their respective offices and vendors from this.
- Escrow – Generally, the buyer and seller split this cost, paid out of closing.
- Excise Tax – In Washington State, the excise tax rate is 1.28%, paid by the seller out of closing. In addition, local rates are usually another 0.5%, although some areas are only an additional 0.25%. Here is a link to the Department of Revenue which lists out the different rates by area.
- Additional Closing Costs – If additional closing costs have been negotiated, these may also get paid out of closing.
- Additional liens – If certain liens exist (including for work that was done to sell the home) these may be included on the net proceeds sheet.
- Additional leases – Sometimes leases for propane tanks or solar panels that the next owner will take possession of may be adjusted and prorated for closing.
Items such as your homeowner insurance and some utilities will usually be billed or credited outside of closing.
