Calculating Selling Price, Cost, and Profit

Understanding the financial outcome of a sale involves calculating the profit or loss. Profit is essentially the difference between what a property sells for and what it cost the seller to acquire and improve it. To find the profit, you take the amount the seller receives from the sale (the selling price minus closing costs) and subtract the seller's "adjusted basis" (the original purchase price plus the cost of any capital improvements like a new roof). If the result is positive, the seller has made a profit; if negative, they have a loss. Conversely, if a seller wants to net a specific amount of money from a sale, you can calculate the necessary selling price by adding the desired net proceeds to the existing mortgage balance and other closing costs, and then dividing this total by the percentage of the sale price the seller will actually keep (100% minus the commission rate).