Home Sale Profit Calculator

Selling a home involves multiple financial considerations. Our Home Sale Profit Calculator helps you estimate your net profit, ROI, and capital gains after accounting for purchase price, selling costs, mortgage balances, and home improvements.

Key Formulas & Equations

1. Gross Profit

The difference between your sale price and original purchase price.

$\text{Gross Profit}=\text{Sale Price}-\text{Purchase Price}$

2. Selling Costs

Typical fees (realtor commissions, closing costs) as a percentage of sale price.

$\text{Selling Costs}=\text{Sale Price}\times \left(\frac{\text{Selling Costs \%}}{100}\right)$

3. Sale Proceeds

Amount received after paying off mortgage and selling costs.

$\text{Sale Proceeds}=\text{Sale Price}-\text{Mortgage Balance}-\text{Selling Costs}$

4. Total Investment

Sum of purchase price and improvements.

$\text{Total Investment}=\text{Purchase Price}+\text{Improvements}$

5. Net Profit

Final profit after all expenses.

$\text{Net Profit}=\text{Sale Proceeds}-\text{Total Investment}$

6. Return on Investment (ROI)

Profitability as a percentage of total investment.

$\text{ROI (\%)}=\left(\frac{\text{Net Profit}}{\text{Total Investment}}\right)\times 100$

7. Annualized ROI

ROI adjusted for holding period.

$\text{Annualized ROI (\%)}=\left[{\left(1+\frac{\text{ROI}}{100}\right)}^{\frac{1}{\text{Holding Period}}}-1\right]\times 100$

Example Calculation

Scenario:

• Purchase Price: $300,000
• Sale Price: $450,000
• Mortgage Balance: $200,000
• Improvements: $25,000
• Selling Costs: 6%
• Holding Period: 5 years

1. Selling Costs

$450,000\times 0.06=\$27,000$

2. Sale Proceeds

$450,000-200,000-27,000=\$223,000$

3. Total Investment

$300,000+25,000=\$325,000$

4. Net Profit

$223,000-325,000=-\$102,000\text{ (Loss)}$

5. ROI

$\left(\frac{-102,000}{325,000}\right)\times 100=-31.4\%$

6. Annualized ROI

$\left[{\left(1-0.314\right)}^{\frac{1}{5}}-1\right]\times 100=-7.3\%$

Conclusion

This calculator helps you:
✅ Estimate true profit after all costs
📉 Identify loss scenarios before selling
📈 Compare ROI for different sale prices
🏠 Make data-driven decisions about home sales

FAQs

1. What is the difference between gross profit and net profit in a home sale?

Gross profit is simply the sale price minus the original purchase price. Net profit deducts all additional costs, including:

• Mortgage balance
• Selling costs (realtor fees, closing costs)
• Home improvements

Example:
If you sell a home for $400,000 (purchased at $300,000) with $20,000 in selling costs and $50,000 left on the mortgage:

• Gross Profit = $400,000 - $300,000 = $100,000
• Net Profit = ($400,000 - $50,000 - $20,000) - $300,000 = $30,000

2. How do selling costs impact my profit?

Typical selling costs (5–6% of the sale price) include:

• Realtor commissions (5–6%)
• Closing costs (1–3%)
• Repair credits or concessions

Example:
For a $500,000 home sale:

• 6% selling costs = $30,000
• Net proceeds = $500,000 - $30,000 = $470,000

Tip: Negotiate lower commissions or sell FSBO (For Sale By Owner) to reduce costs.

3. Does paying off my mortgage increase my profit?

No—your mortgage balance only affects cash proceeds, not total profit.

Example:

• Home sale price: $350,000
• Mortgage balance:
  • If $100,000 remains, you get $250,000 cash.
  • If paid off, you get $350,000 cash.
• Net profit (after purchase price & costs) remains the same.

Key Point: A mortgage payoff increases cash in hand but doesn’t change profit calculations.

5. What’s the difference between ROI and annualized ROI?

• ROI: Total return over the entire holding period.
• Annualized ROI: Average yearly return, accounting for compounding.

Example:

• Purchase Price: $200,000
• Sale Price (after 5 years): $300,000
• Net Profit: $80,000 (after costs)
• ROI: 40% ($80k / $200k)
• Annualized ROI: ~7% (accounts for 5-year growth)

Use annualized ROI to compare real estate with other investments like stocks.