The finances of selling a home: what it costs and what you keep

Q: How much does it cost to sell a house?

Plan on 8% to 15% of the sale price. Agent commissions run roughly 3% to 6%, closing costs add 2% to 4%, and repairs, staging, inspections, concessions and moving costs make up the rest. On a $400,000 home, that is roughly $32,000 to $60,000 before your mortgage payoff. Local transfer taxes and title practice swing the total considerably.

Q: How do I calculate my net proceeds from a home sale?

Start with your expected sale price. Subtract the mortgage payoff including interest through the closing date, then agent commission, title and settlement fees, transfer taxes, prorated property taxes, any HOA fees, buyer concessions and repair credits. What remains is your net proceeds. Your agent can produce this as a seller's net sheet at three price points before you list.

Q: Do I pay taxes on the profit from selling my home?

Often not. If the home was your primary residence for at least two of the last five years, you can generally exclude up to $250,000 of gain, or $500,000 filing jointly. Gain above that is taxed as a capital gain. Second homes and investment properties do not qualify for the exclusion and follow different rules.

Q: Can I negotiate the real estate commission?

Yes. Commission rates are set by agreement, not by law or by any fixed schedule, and they are negotiated openly at the listing appointment. What you can negotiate depends on your market, your price point and how much marketing your home needs. Compare what each agent includes, not just the percentage, before choosing on price alone.

Written by Samantha SheltonNMLS 1647301Updated September 2026

Couple at a kitchen table working through the finances of selling their home

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Eligibility for the home sale gain exclusion, transfer tax exemptions and property tax treatment depend on your individual circumstances; consult a qualified tax professional about your situation.

Selling a home costs more than most sellers plan for. Freddie Mac puts the real estate agent commission at 3% – 8% of the sale price and the fees and taxes owed at closing at another 2% – 4%, which is roughly $20,000 – $48,000 on a $400,000 sale before you add a single repair, concession or moving truck.

None of that is the number that matters, though. The number that matters is your net proceeds: sale price, minus your mortgage payoff, minus commission, minus closing costs, minus repairs and concessions. That figure is what actually lands in your account, and it’s the figure that decides how much house you can buy next.

Learn what the finances of selling a home really look like, including which costs are negotiable and which are fixed by statute, how to calculate your net proceeds, and when you owe tax on the gain. If you’re mapping the whole transaction, start with our Selling A Home guide.

Key takeaways:

Commission plus closing fees runs 5% – 12% of the sale price: Freddie Mac puts commission at 3% – 8% and fees and taxes at 2% – 4%, or about $20,000 – $48,000 on a $400,000 home before repairs and concessions.
Michigan’s transfer tax is 0.86% and the seller owes it: That’s $8.60 per $1,000 of sale price, or $3,440 on a $400,000 home, split between $3.75 per $500 to the state and 55 cents per $500 to the county.
Two of the last five years decides your tax bill: Own and live in the home for 24 months out of the 5 years before the sale and you can generally exclude up to $250,000 of gain from tax, or $500,000 married filing jointly.

What does it cost to sell a home?

Plan on commission and closing fees consuming 5% – 12% of your sale price, then add repairs, prep and any concessions on top. Freddie Mac’s two published ranges are the reliable frame: 3% – 8% for the real estate commission and 2% – 4% for fees and taxes. Everything past that varies too much by house and market to carry a national number honestly.

Here’s how those costs break down on a $400,000 sale, and which ones you can actually move.

Expense	Typical range	On a $400,000 sale	Negotiable?
Real estate commission	3% – 8% of sale price	$12,000 – $32,000	Yes. Set by contract, never by law.
Fees and taxes at closing	2% – 4% of sale price	$8,000 – $16,000	Partly. Some lines are statutory.
Michigan real estate transfer tax	0.86% ($8.60 per $1,000)	$3,440	No. Fixed by statute.
Register of deeds recording fees	$30 per document	$30 – $60	No. Fixed by statute.
Property tax proration	Depends on your closing date	Varies	By contract, within local custom.
Repairs and inspection credits	Depends on the home’s condition	Varies	Yes. Negotiated after inspection.
Pre-listing prep and staging	Quoted locally, no reliable national range	Varies	Yes. Entirely your call.
Buyer concessions	Whatever the contract says	Varies	Yes. Pure negotiation.
Mortgage payoff	Your balance plus interest to the closing date	Varies	No. It’s your debt.

Two notes. The Michigan transfer tax and recording fees sit inside the 2% – 4% fees-and-taxes bucket, so don’t count them twice. And the mortgage payoff isn’t a selling cost at all (it’s your own debt being retired) but it leaves on the same wire, which is why sellers who budget only for commission get surprised. Our breakdown of a seller’s closing costs itemizes each line.

What are the major costs of selling a home?

Four categories account for nearly every dollar that leaves the table: commission, closing costs, home preparation and your mortgage payoff. Here’s where the leverage is.

Agent commission is the largest single line

At 3% – 8% of the sale price, commission is the biggest expense and the most negotiable one, $12,000 – $32,000 on a $400,000 home. It pays for marketing, showings, negotiation and transaction management, and it is set entirely by the agreement you sign.

The rules around it changed. Since August 17, 2024, under the National Association of REALTORS settlement practice changes, offers of buyer-agent compensation may no longer be communicated through a multiple listing service, and buyers must sign a written agreement with their agent before touring homes. Compensation is not set by law and is fully negotiable. A seller can still agree to contribute toward the buyer’s agent, but it’s now negotiated inside the contract rather than advertised on the MLS.

Practically: ask each listing agent what the fee covers, what they’d recommend on buyer-side compensation, and what happens if they bring the buyer themselves. Compare the package, not the percentage.

Closing costs are part statute, part negotiation

Freddie Mac puts a seller’s fees and taxes at 2% – 4% of the sale price, and that bucket splits cleanly into lines you can shop and lines you can’t. Title and settlement fees, attorney fees where used, and any owner’s policy you’re covering by custom are quoted by providers and vary. Transfer taxes and recording fees are set by statute and don’t move.

Your side of the deal gets its own settlement statement showing every debit and credit. Buyers get a Closing Disclosure at least three business days before closing; the CFPB guide to closing figures walks through how those forms are read, and our guide to closing costs as a seller covers what appears on yours.

Repairs and prep are the least predictable category

Pre-listing spending is where sellers overspend, because the return is genuinely hard to measure. Be skeptical of the staging and remodeling return-on-investment figures that circulate online. The most-cited ones come from industry association surveys in which agents estimate what staging did to a sale price. That’s self-reported professional opinion, not a measured outcome, and it’s usually reported without a control group. If a figure doesn’t name the publishing body, the survey year and the sample basis, don’t budget against it. You can check the underlying reports yourself through NAR research on seller costs and outcomes.

Fix what an inspector will find: Active roof leaks, failed mechanicals and water in the basement come back as price reductions or credits later, usually for more than the repair cost.
Get real quotes before you commit: Staging, painting and landscaping have no reliable national price range. Two local bids tell you more than any published average.
Cosmetic upgrades rarely pay for themselves twice: A new kitchen installed to sell competes with a buyer’s own taste. Cleaning, decluttering and paint are the low-risk end of the spending curve.

Your mortgage payoff is bigger than your balance

Your payoff is your principal balance plus interest accrued through the closing date and any servicer fees, not the balance on last month’s statement. Request an official payoff quote and check it for a prepayment penalty, rare on modern owner-occupied loans but not impossible. A second mortgage or home equity line gets paid off too, and an unused line must be formally closed so the lien releases.

How do you calculate your net proceeds?

Net proceeds is one subtraction chain: sale price, minus mortgage payoff, minus commission, minus closing costs, minus prorations, minus repairs and concessions. Run it at three price points before you list (asking, realistic and disappointing) so you know your floor before an offer forces the question. Your agent produces this as a seller’s net sheet; our explainer on what a seller’s net sheet is shows the format.

Here’s the arithmetic on a $400,000 Michigan sale.¹

Line	Amount
Sale price	$400,000
Mortgage payoff, including interest to the closing date	− $255,000
Real estate commission at 5%	− $20,000
Michigan state and county transfer tax at 0.86%	− $3,440
Title, settlement and recording fees	− $1,800
Summer property tax proration	− $1,150
Repair credits after inspection	− $3,500
Buyer closing cost concession	− $4,000
Net proceeds	$111,110

Total selling costs in that example are $33,890, or about 8.5% of the sale price, squarely inside the range once you add repairs and concessions to Freddie Mac’s figures. The payoff is the largest single subtraction, and it isn’t a cost at all.

Now the part sellers skip. That $111,110 is a down payment. At 20% down it covers a $450,000 purchase and leaves roughly $21,000 for closing costs and moving. At 10% down it stretches further, or buys a smaller loan and a lower payment. And the sequencing question (buy before you sell, or sell before you buy) is a financing decision more than a listing decision. Our walkthrough of the selling process covers where it lands in the timeline.

Do you owe taxes on the profit from selling your home?

Usually not. Under the federal home sale exclusion, you can generally exclude up to $250,000 of gain from your income, or $500,000 if you’re married filing jointly, when the home was your main home.² Most Michigan sellers never come close to those ceilings.

Qualifying turns on two tests over the five years ending on the sale date. You must have owned the home for at least 24 months, and you must have used it as your residence for at least 24 months. The months don’t have to be consecutive, and for married couples only one spouse needs to meet the ownership test while each spouse must meet the residence test. There’s also a frequency limit: you can take the exclusion only once in any two-year period.

Three details that change the math:

Selling expenses come off the top: Sales commissions, advertising fees, legal fees and other costs to sell are subtracted from the selling price when you figure your gain. That commission you resented paying reduces your taxable gain.
A loss on your main home isn’t deductible: If you sell for less than your basis, you can’t write off the difference. You also owe no tax on the proceeds.
Expect a Form 1099-S: Gross proceeds get reported to the IRS in box 2, with the sale date in box 1, whether or not you owe anything.

Second homes, rentals and investment property don’t qualify and follow different rules, including depreciation recapture. Read the specifics in IRS Publication 523 on taxes when selling your home, and see our deeper dive on capital gains tax exemptions. Then talk to a tax professional before you sign anything.

What Michigan sellers should know

Michigan puts four line items on a seller’s statement that don’t exist the same way elsewhere, and three of them are set by statute rather than by negotiation.

Transfer tax is 0.86% and it’s yours: The state charges $3.75 per $500 of value and the county charges 55 cents per $500, $8.60 per $1,000 combined, or $3,440 on a $400,000 sale. Michigan law makes the seller or grantor liable, payable to the county treasurer within 15 days of delivery of the deed. Counties over 2,000,000 population may charge up to 75 cents per $500, but no Michigan county currently qualifies.
You may be exempt from the state portion: If the property was your principal residence and its state equalized value at the time of sale is equal to or less than its SEV when you acquired it, and the sale was at fair market value, the state transfer tax is exempt. That’s $3,000 back on a $400,000 sale. Ask your title company about it before closing, or file Treasury Form 2796 afterward if you already paid.
Two tax bills mean two prorations: Michigan levies summer taxes on July 1 and bills winter taxes December 1. Where your closing falls against those dates determines which bill gets prorated and in whose favor. Proration is set by your purchase agreement and local custom, not by statute, so read that clause. One more thing worth telling your buyer honestly: your tax bill won’t be theirs. Taxable value uncaps to state equalized value the year after a transfer of ownership, and if you’ve held the home a long time under the principal residence exemption, up to 18 mills of local school operating tax, the jump can be steep.
Disclosure is a statute, not a courtesy: Michigan’s Seller Disclosure Act applies to transfers of 1 to 4 residential dwelling units and requires a written disclosure statement delivered before a binding purchase agreement, with statutory exemptions for court-ordered and certain fiduciary transfers. Known defects (foundation, water intrusion, environmental) get disclosed. Selling “as-is” does not waive that duty. Separately, federal law requires sellers of pre-1978 housing to hand over the EPA’s “Protect Your Family From Lead in Your Home” pamphlet, disclose known lead-based paint hazards, and give buyers a 10-day opportunity to inspect unless both parties agree in writing to a different period. Concealing a known defect is the one line item that can cost more than the house.

How Align keeps your sale and purchase on one timeline

Selling and buying at once means two closings that have to line up. Samantha builds your next loan around your sale date, together with your agent, so the two dates are planned as one.

She handles your loan herself, with a processor supporting her behind the scenes, and her loans averaged under 14 days from application to clear to close over the last 12 months, across more than 100 loans.

Plan a buy before you sell

Sources: Align Lending loan records, 12 months to October 2026.

FAQ: the finances of selling a home

Here are answers to common questions about the finances of selling a home.

How much does it cost to sell a house?

Budget 5% to 12% of the sale price for commission and closing fees, then add repairs, prep and concessions. Freddie Mac puts commission at 3% to 8% and fees and taxes at 2% to 4%, which is $20,000 to $48,000 on a $400,000 home. Local transfer taxes and title practice swing the total. Our line-by-line breakdown of a seller’s closing costs shows where each dollar goes.

How do I calculate my net proceeds from a home sale?

Start with the expected sale price, then subtract your mortgage payoff including interest through the closing date, commission, title and settlement fees, transfer taxes, prorated property taxes, HOA dues, buyer concessions and repair credits. What’s left is your net proceeds. Ask for the estimate at three price points before you list, and see when a seller actually gets the money after closing for the payout timing.

Do I pay taxes on the profit from selling my home?

Often not. If you owned the home and used it as your residence for at least 24 months out of the 5 years ending on the sale date, you can generally exclude up to $250,000 of gain, or $500,000 married filing jointly. Gain above the ceiling is taxed as capital gain, and second homes and rentals follow different rules. Our guide to capital gains tax exemptions covers the edge cases.

Can I negotiate the real estate commission?

Yes. Commission is set by the agreement you sign, not by law or any fixed schedule, and since August 2024 written agreements and open negotiation are the standard. What you can negotiate depends on your price point, your market and how much marketing the home needs. Compare what each agent includes rather than choosing on percentage alone, and see how the fee fits the wider timeline in our guide to selling your house.

The bottom line on the finances of selling

Commission and closing fees consume 5% – 12% of your sale price, Freddie Mac’s 3% – 8% commission plus 2% – 4% in fees and taxes, or about $20,000 – $48,000 on a $400,000 home before repairs, concessions and your mortgage payoff come out. In Michigan, add a 0.86% transfer tax the seller owes by statute, $3,440 on that same sale. Run the net sheet at three price points before you list, and expect to owe no federal tax on the gain if you owned and lived in the home 24 of the last 60 months.

Your net proceeds are really a down payment in waiting. If you’re ready to find out how far yours will stretch on your next home, talk to Align Lending. We’ll shop your scenario across our lender network and show you the numbers side by side. Call 248-506-5727 or start online today.

Footnotes:

1. Example figures in this article are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. Commission rates, title and settlement fees, prorations, repair credits and concessions are negotiated per transaction and vary by property, provider and closing date. Your actual figures will appear on your settlement statement. Return to text.

2. This is general information, not tax advice. Eligibility for the home sale gain exclusion depends on your ownership and use history, filing status, prior use of the exclusion, any nonqualified or rental use, and other individual circumstances. Consult a qualified tax professional about your situation. Return to text.

Sources: real estate agent commission of 3% to 8% of the home’s sale price and fees and taxes of 2% to 4% of the sale price, My Home by Freddie Mac, “Understanding the costs of selling your home.” Maximum gain exclusion of $250,000 and $500,000 for married couples filing jointly, the 24-month ownership and 24-month residence requirements within the 5-year period ending on the date of sale, the once-every-2-years limit, the rule that only one spouse must meet the ownership test while each spouse must meet the residence test, the selling expenses subtractable from the selling price (sales commissions, advertising fees, legal fees, and loan charges that would normally have been the buyer’s responsibility), the nondeductibility of a loss on the sale of a main home, and Form 1099-S reporting of gross proceeds in box 2 and the sale date in box 1, IRS Publication 523, Selling Your Home. Closing Disclosure delivered at least three business days before closing, Consumer Financial Protection Bureau. Effective date of August 17, 2024 for the removal of offers of buyer-broker compensation from multiple listing services, the written buyer agreement requirement, and the disclosure that compensation is not set by law and is fully negotiable, National Association of REALTORS® settlement practice changes. Michigan state real estate transfer tax of $3.75 per $500 of value, MCL 207.525(1); seller or grantor liability and the 15-day payment deadline, MCL 207.523(2)–(3); state transfer tax exemption for a principal residence sold at fair market value where the state equalized value at sale is equal to or less than the state equalized value at acquisition, MCL 207.526(u) and Michigan Department of Treasury Form 2796. Michigan county real estate transfer tax of 55 cents per $500, with up to 75 cents authorized only in a county of 2,000,000 or more population, MCL 207.504. Register of deeds recording fee of $30 per document, MCL 600.2567(1)(a). Summer property tax levy collected July 1, MCL 211.44a. Taxable value uncapping to state equalized valuation following a transfer of ownership, MCL 211.27a(2)–(3); principal residence exemption from local school operating tax, MCL 211.7cc(1), to the extent of the not-more-than-18-mill levy authorized by MCL 380.1211(1). Seller Disclosure Act coverage of transfers of 1 to 4 residential dwelling units, delivery before a binding purchase agreement, and statutory exemptions, MCL 565.951 et seq., MCL 565.952 and MCL 565.954. Federal lead-based paint disclosure for pre-1978 housing, the “Protect Your Family From Lead in Your Home” pamphlet, and the 10-day inspection opportunity modifiable by written agreement, U.S. Environmental Protection Agency, Real Estate Notification and Disclosure Rule (Section 1018 of Title X; 42 U.S.C. § 4852d). Home staging and remodeling return-on-investment estimates described as agent-reported survey data, National Association of REALTORS® Research and Statistics.

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Selling costs, commission rates, transfer taxes, recording fees, prorations and tax rules change and vary by property, county and individual circumstances; confirm your figures with your settlement statement and consult a qualified professional about your situation. Figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending is an independent Michigan mortgage broker, NMLS #2041154, and does not list or sell real estate.