How Much Can I Make Selling My House?

If you’re like most people, your house is your most valuable asset. It makes up a huge portion of your net worth and plays a central role in your retirement plans. 

So asking “How much will I make on my house?” isn’t just an idle daydream. It often determines whether you move or stay in place, where your kids go to school, and where you end up retiring. 

It can also prove the deciding factor in a locked-up real estate market like the current one, where many homeowners feel loath to give up their fixed low-interest mortgage. 

Here’s how to calculate the profit from selling a house, to help you make the best decision possible.

How Much Profit Will I Make Selling My House?

First and foremost, you need to know the current market value of your home. If you plan to make some repairs before selling, research the after-repair value. Either way, start by looking up comparable sales, and speaking with a few local real estate agents.

You’ll then need to subtract out the principal balance of your mortgage, and all costs associated with selling your home. Plan for the following common costs of selling a house.

Costs to Prepare the Home for Sale

What doesn’t work optimally in the house? What looks noticeably dingy or dated? 

Even if the home doesn’t need any repairs, you’ll probably want to spruce it up with a fresh coat of paint, cleaning up the landscaping, and perhaps steam cleaning the carpets or putting some polish on the hardwood floors. 

An analysis by Thumbtack and Zillow found that the average home seller spends $5,380 on home prepping costs. 

Just beware of spending more on home improvements than they’ll add to the price of your home. Most home renovations cost more than they add in value, so work closely with your real estate agent to determine the minimum work necessary to score the best practical price.

Finally, add in any staging costs that your real estate agent recommends. In today’s world, you may even be able to stage your photos digitally, without actually moving in a stick of real furniture.

Seller Concession

The unwritten rule of real estate markets today is that sellers provide up to 6% of the sales price as a seller concession. This amount helps buyers cover their closing costs. Err on the safe side and budget 6% — the amount allowed by most conventional bank loans.

Seller Closing Costs

It costs tens of thousands to sell the average home in the US. 

As a general rule, plan on spending between 8-10% of the sales price on seller closing costs. For a median home selling at $420,400, that comes to between $33,632 and $42,040. Yikes. 

Sellers historically paid around 6% of the sales price to real estate agents, with half going to their own agent and half going to the buyer’s agent. The 2024 settlement by the National Association of Realtors has meant that some buyers now pay for their own agent, but don’t count on that necessarily reducing your costs. 

You can try to sell your house without a Realtor, just beware that you risk ending up with a lower sales price.

Other closing costs that sellers often cover include transfer taxes, recordation fees, real estate attorney fees, and perhaps some or all of the buyer’s title insurance premium. 

As a final thought, you’ll also have to come out of pocket for buyer closing costs if you plan to buy a new home rather than renting. Buyers generally pay less, but still have to cough up 2-5% of the purchase price in most cases. That’s not technically a cost associated with selling your home, but it’s a real cost of moving nonetheless.

Moving Costs

Speaking of the costs of moving, the move itself will likely put a dent in your pocketbook. 

If you hire movers, the average cost of a local moving company is $1,713 according to Angi.com. Long-distance moves can cost anywhere from $2,700 to $10,000 or more. 

Even if you rent a truck and bribe all your friends with beer and pizza, expect to lay out some money. Expect to pay between $20 and $100 per day, and significantly more for long-distance one-way rentals. Plus $100 or more for beer and pizza, of course.

The Possibility of Capital Gains Tax

The homeowner exclusion, also known as the Section 121 exclusion, gives homeowners up to $250,000 in tax-free capital gains when they sell a home. That number doubles to $500,000 for married couples.

However, not all homeowners qualify for the Section 121 exclusion. You must have lived in the home for at least two of the last five years, although those two years don’t have to be consecutive. 

So, if you’ve only owned the house for a year and a half, you might consider living there another six months. The same goes if you moved out of the house for a time and recently moved back in.

How to Calculate Profit from Selling a House

Running the numbers isn’t exactly advanced calculus, but you still need to get it right if you want to accurately answer “how much profit will I make on my house.” 

Use the following formula for how to calculate profit from selling houses:

Sales Price – Home Prep Costs – Seller Closing Costs – Seller Concession – Moving Costs = Profit from Selling a House

If you plan to buy a new home, add the buyer closing costs from that transaction into the total cost to move homes. 

Many homeowners find the process of calculating their net profit disillusioning. It’s all too easy to say “The Zillow estimate of my home is $450,000, but I only owe $300,000! I could walk away with $150,000!” 

No, you couldn’t. You’d be lucky to walk away with $100,000.

Sample Calculation: How Much Will I Make on My House?

Let’s run some real life numbers, shall we?

Say your home really is worth $450,000 — in premium selling condition. To whip it into selling shape, you spend $5,000 on painting, landscaping, and polishing up the floors. 

You list it for $475,000, and accept an offer for $450,000 with a 6% seller concession. That knocks $27,000 off your net proceeds. 

At the settlement table, you pay another 10% in seller closing costs, subtracting another $45,000. 

You spend another $2,000 on movers, boxes, and other moving-related expenses. 

And then you buy a new house for $500,000, and pay 3% in buyer closing costs. That dings you another $15,000. 

All told, the moving expenses add up as follows:

• House prep: $5,000
• Seller concession: $27,000
• Seller closing costs: $45,000
• Moving costs: $2,000
• Buyer closing costs: $15,000
• Total Cost of Move: $94,000

Subtract that from your selling price of $450,000 and you have $356,000. Continuing the above example numbers, subtract your mortgage balance of $300,000.

You’re left with a net profit of just $56,000, despite your house technically having $150,000 in equity on paper.

Should I Sell My House?

When you consider selling your home, you have to balance the financial numbers with your personal needs and wants. 

If you own a one-bedroom condominium, and your newlywed spouse moves in with you and promptly gets pregnant, you’ll probably consider moving even if the numbers don’t look perfect on paper. 

The same goes if you need to move cities for work, or plan to move to a new state to be with your partner, and so forth. Or you may want to move to a better school district as your children reach school age, or reduce your commute, or move into a single-story “forever home” to age in place. 

That said, the profit numbers can also play a role in your decision. 

Moving is expensive, especially as a homeowner. It’s easy to get excited when you look at your home equity on paper. But it can cost 15-20% or more of your home’s value to move, when you factor in every cost involved.

If you don’t have a clear and present reason to move, it usually makes more sense to stay. 

As a final thought, the numbers to calculate profit from selling your home don’t include the inconvenience and stress of packing up your entire life and moving into a new home. Or, for that matter, the temporary housing you might need to take up, in between when you sell your house and buy or move into a new long-term home.

The “Breakeven Horizon” for Homes

Because real estate is so illiquid, and it costs so much to buy and sell a home, homes have to appreciate a certain amount for homeowners to break even. You have two rounds of closing costs that you need to cover with that appreciation. 

Historically, some real estate agents referred to a five-year rule of thumb when advising clients how soon they can sell a house after buying. If you plan on living in a house for five years or more, it makes more sense to buy than to rent. That rule of thumb doesn’t apply in many housing markets today. 

It may take three years for a home to appreciate enough to cover both rounds of closing costs. Or it may take six years. 

Regardless, the concept of a breakeven horizon is worth keeping in mind as you explore whether to buy or rent.

Final Word

“How much will I make on my house?” Not as much as most homeowners think. 

On paper, it often looks like you have a huge amount of equity in your home. But the reality of liquidating your home isn’t quite so rosy. 

Before entertaining the thought of selling your home any further, run some quick back-of-the-napkin numbers. Use conservative numbers to err on the side of caution. 

That being said, the decision comes down to more than money. You may need to move for any of a hundred reasons. And your life may improve immeasurably for that move.

Just make sure you go into the move with open eyes, knowing exactly how to calculate profit from selling a house. The last place you want to find yourself is coming out of pocket for a move when you thought you’d walk away with a tidy sum.