math

net proceeds

Net proceeds are the amount of money a seller actually receives at closing after all costs and payoffs are deducted from the sale price. Typical deductions include the mortgage payoff, brokerage commissions, transfer taxes, prorated property taxes, seller concessions, and other closing costs. Exams often ask students to calculate net proceeds or to work backward to find the sale price needed to net a certain amount.

Exam tip: To find the price needed to net a target: (desired net + costs) / (1 - commission rate). Do not just add the commission to the net.
Example: A home sells for $350,000; the seller pays a $210,000 payoff, $17,500 commission, and $4,500 other costs, netting $118,000.

1. A home sells for $389,000. The seller pays a 5% commission, a $212,600 mortgage payoff, $1,200 attorney fee, $1,950 transfer tax and $600 in other costs. What are the seller's net proceeds?

Answer & explanation

Answer: D. Commission = $389,000 x 0.05 = $19,450. Total costs = $19,450 + $212,600 + $1,200 + $1,950 + $600 = $235,800. Net = $389,000 - $235,800 = $153,200.

Related terms & state variants

closing statement commission split loan payoff seller concession

Sources

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Last verified: 2026-10-23