City-Data Forum Calculating profit on home sale
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05-10-2014, 05:05 PM
 4,743 posts, read 3,721,433 times Reputation: 2481

Quote:
 Originally Posted by nitynity Thanks Iggier. I know it's too late and nothing that could be done at this time. Purchase price was 275k + closing cost = 282k loan amount. Sales price = 320k. According to my math, Profit = 320k - 282k - 25k(other expenses like commission, title etc.) = 13k According to Realtor, Net Profit = 320k - 260k (remaining mortgage balance) - 25k = 35k Am I really making 35k or 13k? i guess I don't have a choice regardless...

when you replay a loan your not making money

sheesh

05-12-2014, 03:15 PM
 5,444 posts, read 4,823,845 times Reputation: 15030
I also think it depends on how long you have had the loan.

There are so many variables such as how long you have had the house? Have you been paying extra into principle on the house? Your first handful of years owning a home, you are paying pretty much all interest. So, you could have shelled out 1400 a month (before taxes) for 5 years, but only reduced the principle by 23K, even though you have truly paid 84,000.

So, right away, you are in the hole 61,000, if you sold the house for exactly what you paid. In this case you sold the house for 320K. For sake of math, lets assume that 320K is after commissions for the agents. 320K - 282K = 38K. 38K in cash minus the 61K equals a loss of 23K over all. Well, you actually sold your house for a loss.

Keep in mind this is factoring in that you did get a place to live for 5 years. I don't know how many years you have been in the house either so 5 years was just an example.

This was just to show it isn't as simple as subtracting one number from another to get your profit.

05-12-2014, 04:34 PM
 4,743 posts, read 3,721,433 times Reputation: 2481
Quote:
 Originally Posted by headingtoDenver I also think it depends on how long you have had the loan.

nope

Quote:
 Originally Posted by headingtoDenver This was just to show it isn't as simple as subtracting one number from another to get your profit.
YEP.

You take out a loan on a car.
The car loses value, or goes up in value

the loan is for \$10,000 the purchase price of the car

if you sold your for \$11,000 you made a cool grand. Even if your loan was paid off.

if you sold your car for \$8,000, you lost 2 grand. even if your l oan was paid off

it doesn't matter how long/whatever

you only make money based on the purchase price. . .

Paying a credit card loan doesn't make your TV worth more. Doesn't discount it

05-12-2014, 06:02 PM
 Location: Denver, CO 1,627 posts, read 3,712,541 times Reputation: 1778
That said, you could still make a profit on the sale and actually lose money.

Interest..."paying for the privilege", as they say, is essentially buying the present with the future.
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