Net proceeds is the amount of money a seller will receive after the sale of a home. Net proceeds is calculated by taking the sale price of a home and subtracting all selling costs. Typical selling costs include:
- Payoff of existing mortgages
- Pro-ration of property taxes and utilities
- Real estate commissions
- Transfer and/or excise taxes
- Title/escrow/closing fees
Net proceeds is different than equity since it accounts for closing costs. A transaction with negative net proceeds means that the seller will have to bring money to closing in order to complete the transaction.