Real Estate Calculator

How are net proceeds from a home sale calculated?

The seller's closing statement has five deductions between the sale price and the cheque you receive: the agents' commission, the mortgage payoff from your lender's payoff statement, seller-paid closing costs, the state or county transfer tax, and any concessions or other negotiated costs. Net proceeds are what is left after all five.

Commission has historically totalled about 5–5.5% for both agents and is fully negotiable. Seller closing costs — title insurance, attorney or escrow fees, recording fees and tax prorations — usually run 1–3% of the price. Transfer tax ranges from nothing in many states to over 3% in others.

The most common mistake is confusing the sale price with the proceeds. A $450,000 sale with a $300,000 payoff, 5.5% commission, 1% closing costs and a 1% transfer tax leaves $116,250 in net proceeds — about a quarter of the sale price (worked example 1). Running the numbers before listing prevents surprises at closing.

Transfer tax is the most overlooked line: it exists in most states and some counties add their own. The default in this calculator is 0% because many states genuinely have none; enter your state and county rate before using the result to plan.

What does home equity measure, and what does it not tell you?

Home equity is simply the difference between what your home is worth and what you owe on it. If your home is worth $450,000 and you owe $300,000 on your mortgage (plus any HELOC or second mortgage), your equity is $150,000 — about 33% of the value, which also means your loan-to-value ratio is 67%.

LTV matters because lenders use it to set terms. Most conventional lenders allow you to borrow against equity up to a combined LTV of 80–85% (meaning you keep 15–20% as a cushion). When LTV is above 80%, you typically paid or are paying PMI on a conventional loan. When LTV drops below 78%, PMI on a conventional loan must be cancelled by law.

What equity does not tell you: it is not cash in your pocket. You can only realise equity by selling (in which case the proceeds calculation above is what matters) or by borrowing against it (a HELOC or home-equity loan, which creates a new lien). The value figure in the equity calculation is also the reader's estimate — no AVM or live market lookup is performed here.

How is real estate ROI calculated, and why does the holding period matter?

Total return is net proceeds from the sale minus everything you put in, divided by everything you put in. Total cost in is the purchase price plus buying costs plus capital improvements made while you owned the home; net proceeds are the sale price after every seller cost, worked out as in the proceeds tab.

The annualised return — the CAGR — compounds this total return over the holding period. A 50% total gain over 10 years is only 4.1% per year annualised. The same 50% gain over 3 years is 14.5% per year. Holding period is therefore as important as the gain itself when comparing real estate to other investments.

The benchmark comparison field lets you see what the same money would have grown to at a rate you choose — 7% is commonly cited as a long-run S&P 500 proxy, but this is your assumption, not a forecast. A few important things this comparison does not model: leverage (your down payment, not the full price, was your actual capital at risk), rental income during the hold period, the IRS §121 capital-gains exclusion on a primary residence, or depreciation recapture — all of which can significantly change the real after-tax return.

What counts as a good real estate return?

There is no universal answer, but context helps. The FHFA House Price Index shows US single-family home prices rose at an annualised rate of roughly 4–5% over the past 30 years — but with significant regional variation and year-to-year swings. That figure is appreciation only; it excludes rental income, leverage effects, carrying costs and transaction costs.

On a leveraged basis (a typical 20% down payment), a 4% annual appreciation on a $300,000 property represents a $12,000 gain on a $60,000 cash investment — a 20% cash-on-cash return before costs, ignoring the mortgage paydown. But it also means the mortgage payment, maintenance and vacancy must be covered for the hold period. This calculator focuses on the selling side; the Rental Property Calculator handles the hold-period cash-flow analysis.

The honest comparison is: did this property, net of all selling costs and accounting for everything you put in, outperform what the same dollars would have done in a low-cost index fund over the same period? The benchmark field in ROI mode lets you run that comparison on your own numbers.

What can this real estate calculator not do?

This calculator does not fetch live home values, read your mortgage balance or look up local transfer-tax rates — every number is one you enter. Nor does it apply tax: the §121 exclusion of up to $250,000 or $500,000 of gain on a main home (IRS Publication 523), depreciation recapture on a rental, or state tax on the gain.

Those items are material to what you keep after tax; use a tax professional or the capital-gains tax calculator for them.

It does not model rental income during the hold period (that is the Rental Property Calculator), HELOC or home-equity borrowing costs (see the Mortgage or Loan Amortization calculator), or the buyer's carrying costs (points, private mortgage insurance, maintenance). The results are pre-tax, pre-financing-cost estimates for planning purposes.