Not every real estate agent works a deal the same way. That is why every seller should make sure they insist on seeing what is commonly called the “net” sheet. Formerly, this is the “Seller’s Estimated Proceeds” worksheet. It is exactly what the title implies, an estimation of the proceeds a seller should receive from the sale of their home.
This sheet takes in account the sales price, the anticipated closing date, the typical fees associated with the sales transaction and gives an estimated bottom-line for the seller. There’s a signature opportunity at the bottom for the seller and the agent. But amazingly, many sellers never see a net sheet. The form is not required and some agents would rather you do the math or wait until the day you are sitting across the desk from the escrow agent and their pile-o-papers to see the bottom line. By the way, those agents are typically not at your closing.
When I sit down with a seller, many times before I have listed their home, we work out a net sheet. Every seller has a mental bottom line they want and there is no better way to see if that is at all realistic than by completing a net sheet. I also tell the seller when they list with me that there are two documents they will sign several times during the selling process. The agency disclosure and the net sheet. Anytime a change occurs in the selling process or a new player enters the arena, these documents need to be updated and confirmed by signature.
The net sheet indicates many items but here are the basics:
- Projected Sale Price
- Projected Closing Date
- Lenders fees – loan payoffs
- Escrow and Title fees
- Sales Commissions
- Property Taxes
- Inspections and corrective work
- Home Owners Association fees – if any
- Any credits to the buyer
- Estimated Seller Cash Proceeds
I use the net sheet with my clients constantly. I use it as a way to demonstrate different selling strategies and I use it as a way to demonstrate if their goal is realistic. In my mind it is the only way to be truly honest about the proceeds of the process. There are very few sellers who know all the different transaction costs involved. That is certainly one of the reasons why most hire a professional.
One other thing to keep in mind; it is an estimated sellers proceed. Why estimated? Because some items may adjust one way or another. For example, I enter the pay-off the seller gave me for the loan and when the actual pay-off comes from the lender it a different. Or the exact day of closing requires and adjustment in how many days of pre-paid interest will be credited back to the seller. Personally, I always try to make sure my estimate is on the conservative side so my seller is pleasantly surprised on closing day.
If you are a buyer you should receive within 3 business days of applying for a loan a booklet from HUD (Housing & Urban Development Department) explaining the settlement statement and costs involved. The HUD-1 settlement statement includes the costs both side may pay. You can download this booklet to review on the HUD web site.
The bottom line; know your bottom line. Hold your agent accountable to providing an Estimated Sellers Proceeds document so you are not surprised on the day of closing the sale. Make sure you are working with a professional and you won’t be selling without a net.