How much profit do I make when I sell my house?

How much profit do I make when I sell my house?

Postby duarte » Mon Jan 31, 2011 7:22 am

Say I purchase a property for £100,000
My mortgage deposit is £50,000

If the house sold for £90,000 then I would only pocket £40,000 right?
And on the other hand if it sold for £110,000 then I would pocket £60,000?

New to this all and not good with it! Sorry if it sounds dumb. Thanks
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How much profit do I make when I sell my house?

Postby yehudi1 » Mon Jan 31, 2011 7:27 am

Um, yeah, it does sound ... inexperienced.

In the first place, there will be extra costs above your deposit, and you're going to be paying the mortgage while you're trying to flog the place. The real question is -- can you afford to make the mortgage payments if you CAN'T sell it? Because if the house doesn't move and you fail to make payments, you lose the house AND your deposit.

It is NOT as easy as it looks to make big bucks in real estate. But having bought and sold a couple of houses in the course of my life, I can tell you -- you never "pocket" as much as you hope because there are usually repairs to be made and buyers don't just pop up when you want them.

Talk to some people who have experience in what you're doing, and don't just talk to estate agents who are trying to sell this house. They tend to dwell on the rosy possibilities and downplay the risks.
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How much profit do I make when I sell my house?

Postby bodaway » Mon Jan 31, 2011 7:31 am

Bear in mind you'll likely pay 2,000-5,000 to buy the place, and closer to 7,000 - 10,000 to sell it. There will also be holding costs and repair costs but you will have a place to live (or rent) while you own it. Genreally if you buy a place for 100,000 and then resell it for the same amount you probably took at least at 15,000-20,000 loss on the transaction; maybe alot more.
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How much profit do I make when I sell my house?

Postby twain21 » Mon Jan 31, 2011 7:36 am

Only the purchase and selling price plus expenses (real estate commissions, title fee, transfer tax, attorney fees, etc.) makes any difference. Your mortgage deposit or how much you owe on the loan when you sell the house does not enter into the calculations.

If the purchase price including expenses was £100,000 and you sold it for £90,000 including expenses, you would have a loss of £10,000. If you sold it for £110,000 including expenses, your profit or gain would be £10,000.

How much you pocket (which is different than profit or loss) will depend on how much of the mortgage was paid off.
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How much profit do I make when I sell my house?

Postby leal90 » Mon Jan 31, 2011 7:42 am

It depends on the type of mortgage you take out, and how long you have the house and pay the mortgage for before you sell it, but in most circumstances you are right. I will give my last house sale as a general idea :

I bought for £50,000 with £10,000 deposit (I borrowed £40,000)
I sold for £100,000
I had been paying it for 6 years so I only owed the mortgage company £33,000
I paid them back their £33,000 and pocketed the other £67,000
This meant an actual profit of £57,000 as I had already spent £10,000 on the deposit
BUT out of the £67,000 I got, I had to pay :
£1,000 mortgage close down fee (as I was not buying another house so did not want another mortgage)
£1,450 estate agent fees to sell my house
£750 legal fees to sell my house

That was 2 years ago, and these days I understand you also have to pay a few hundred pounds for a home report before you can sell it too.
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How much profit do I make when I sell my house?

Postby rhisiart » Mon Jan 31, 2011 7:43 am

You would have to sell it for more than you paid for it to make any profit. For example you pay 100,00 for a house, where you find the money doesn't matter. Now if you sell it for less than 100,000 you will have a loss (not a profit) If you sell for 110 (as you mention) then you make a 10,000 profit. Unfortunately you will have to pay costs out of the profit, solicitors fees, etc.
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