How much will I actually walk away with if I sell before the trustee’s sale?

Online net proceeds calculators assume a loan in good standing. When payments are behind, the payoff grows every month in ways those calculators miss.

Start with a payoff quote

If you’ve received a notice of default, it lists what it would take to cure the default. That’s the reinstatement amount: the missed payments, late charges, and fees needed to bring the loan current. It’s the right number if you’re trying to keep the house. For a sale, it tells you very little.

A sale has to pay off the whole loan. The figure you need is the payoff amount, which is the entire unpaid balance plus interest and every fee and advance the servicer has added. Ask the servicer for a written payoff quote. It will carry a good-through date and usually a daily interest figure for each day past that date, so ask for one good through a date close to when a sale could realistically close.

Escrow will order its own payoff demand before closing, so the quote you get now is a planning number. It’s still the most important number on the page.

What gets added to the balance while you’re behind

A payoff quote on a delinquent loan often has more lines than people expect. Common ones include:

• Interest that has accrued since the last payment was applied.
• Late charges for each missed payment.
• Property taxes and insurance premiums the servicer paid from its own funds, called escrow advances. If your homeowner’s insurance lapsed, the servicer may have bought a policy for the house and charged it to the loan, and those policies usually cost more.
• Property inspection fees, from the drive-by visits servicers order on delinquent loans.
• Foreclosure fees and costs: the trustee’s fee, attorney fees, title searches, recording, mailing and posting of notices, and postponement fees if the sale date has been moved.
• Amounts deferred by an earlier forbearance or modification, which often come due when the house is sold.

If any line looks wrong, ask the servicer in writing for an itemization. A housing counselor can help you read it.

Other liens that get paid from the sale

The first mortgage is rarely the only claim on a house by the time it’s in foreclosure. Anything recorded against the property generally has to be paid or released at closing before the buyer gets clear title. That can include:

• A second mortgage or home equity line of credit, which needs its own payoff quote.
• A separate lien from an earlier loan workout. Some government-backed loans place the missed payments in a second, interest-free lien that comes due on sale.
• Unpaid homeowners association or condominium dues, which can become a lien.
• Delinquent property taxes. If a tax installment has gone unpaid, the article on unpaid property taxes in Pierce and King County covers what the county can do.
• Court judgments against an owner, and state or federal tax liens.
• Contractor liens from unpaid work on the house, and some unpaid utility charges.

The preliminary title report is where all of this surfaces. With a sale date on the calendar, it pays to order the preliminary title report as soon as the house is listed, well before an offer comes in, so a judgment filed under a similar name or a forgotten line of credit gets sorted out while there’s still time.

Washington seller costs

Real estate excise tax. Washington charges an excise tax on the sale of real property, and state law makes it the seller’s obligation. The state portion is graduated, meaning higher-priced sales pay a higher rate on the portion of the price above each threshold, and cities and counties add a local rate on top. The rates and thresholds are set by law and adjusted over time, so let escrow calculate yours. The Washington Department of Revenue also publishes the current rates.

Commission. Brokerage compensation is negotiable. It’s set in writing in the listing agreement you sign before the house goes on the market and is paid from the proceeds at closing. Any compensation to the buyer’s broker is negotiated as part of the deal as well.

Title insurance. In Washington, the seller customarily pays for the buyer’s standard owner’s title insurance policy.

Escrow fee. Commonly split between buyer and seller, though the purchase agreement decides.

Smaller items. Your share of the current year’s property taxes up to the closing date, any HOA transfer or document fees, final water and sewer charges, and recording fees to clear the old deed of trust.

Negotiated credits. If the buyer’s inspection turns something up, a repair or a credit at closing may come out of your proceeds.

Moving costs won’t appear on the settlement statement. Put them on your own list anyway.

A rough worksheet you can fill in tonight

Print this, or copy it onto a sheet of paper. Leave a line blank until you have a real number from the source listed beside it. A guess on one line can make the bottom line look better or worse than it is.

If the bottom line comes out below zero, a regular sale can’t close without the lender agreeing to take less, which is a short sale. The article on whether a short sale is better than foreclosure in Washington goes through that choice.

If it comes out positive, remember that the payoff line grows every month the loan stays behind. The earlier the sale closes, the more of that figure stays with you.

Gain on the sale of a home can have tax consequences, and forgiven debt in a short sale can too. A tax professional can tell you how either applies to you.

Getting a realistic price when time is short

The top line of the worksheet is the one people are most tempted to guess, and the one worth taking the most care with. A realistic price comes from recent sales of homes like yours, nearby, adjusted for condition. The house you remember buying and the house a buyer will walk through today are sometimes different houses.

A tight calendar forces tradeoffs, and it helps to see them plainly. Pricing close to the market draws more buyers and more offers. A cash buyer can often close faster, sometimes at a lower price. A buyer using a loan may pay more but needs an appraisal and time for the lender. Which of these matters most depends on the date printed on your notice of trustee’s sale, and the selling before a trustee’s sale page explains how I work backward from it.

If that date arrives before a sale closes and the trustee hasn’t postponed it, the house goes to auction, and the rules about possession change quickly. The article on how long you have to move out after a trustee’s sale covers what happens next. Most people would rather have their own worksheet in hand well before then.