After the House Sells, How Much Will I Actually Take Home? After the Loan Balance, Transaction Costs, and Possible Credits to the Buyer, How Much Is Left for the Next Down Payment?
Net proceeds equal the sale price minus the loan balance, minus transaction costs, minus concessions to the buyer. The sale price is never the same as the money you take home. Run through this formula once first, so your move-up plan does not go wrong.
Take the formula apart, one item at a time. Step one is the sale price minus the loan balance. That is your equity in the house. Ask your lender for a payoff amount. It will differ a bit from the balance on your monthly statement, because it includes interest counted through the closing date, and it is the most accurate number. Step two is deducting transaction costs. Selling a house is not free. The main items are the broker commission, the service fee for the buyer's and seller's agents, with the percentage varying by case and set in the contract before signing. Closing costs come next: title insurance, escrow fees, document fees, and similar items, usually shared by buyer and seller according to local practice. Property tax and HOA are prorated. You pay property tax and HOA up to the day you sell. Overpayments get refunded and underpayments get made up. And repair or cleaning costs: items you agreed to fix for the buyer after inspection, or the cost of hiring someone to clean and haul things away before handover. Step three is deducting concessions to the buyer, the part most easily overlooked. A price reduction agreed to in negotiation. A repair credit, where you pay the buyer money instead of fixing something. And a buyer closing cost credit, where the seller sometimes covers part of the buyer's closing costs to get the deal done. After these three steps, what is left is the money that actually goes into your pocket and can be used for the next down payment.
Carmel Valley sellers should watch two things in particular. The first is that Mello-Roos does not affect your net proceeds, but it does affect your sale price. Mello-Roos is the buyer's annual carrying cost, covered in Q10, and buyers add it into their monthly payment when they calculate. If your house has especially high Mello-Roos, buyers will bid more conservatively, which indirectly affects what you take home. Before you sell, find out the Mello-Roos amount and how many years are left on your tax bill, so you know where you stand. The second is the room for concessions in high-price areas. The median single-family price for the whole Carmel Valley area is about $2,550,000, and Del Mar Mesa reaches $4,488,000. The higher the price, the larger the concessions buyers usually ask for in negotiation, since inspection repairs and credits scale with the price. When you budget, do not just count the sale price. Leave room for what you may have to give away.
Do not forget taxes. There is one hidden item in net proceeds: capital gains tax. If you have lived in Carmel Valley a long time, your house has likely gained a lot in value, and the part above the primary residence exclusion may be taxable, at the federal level and in California. This varies a lot from person to person: how many years you held it, whether it was your primary residence, and whether you did a 1031 exchange before. Leave a placeholder for it in your estimate, and confirm the details with your accountant. Do not guess on your own.
My practical suggestion is to ask your agent for a seller net sheet before you decide to sell. Using an estimated sale price, your agent lists every item above one by one. Once that sheet is done, you will know clearly how much money you will have after the sale, whether it is enough for the next down payment, and whether you need to adjust your expectations. With the numbers laid out in the open, your move-up plan becomes solid. I am happy to make this estimate for you. Give me your loan balance and the basic information about your house, and I will do the rest of the math.