Net Proceeds
posted on 06-06-2019
What it is:
How it works/Example:
For example, a homeowner sells his house for $100,000. After deducting real estate agent fees and closing costs of $10,000, his net proceeds equal $100,000 - $10,000 = $90,000.
This can also apply to selling stocks and other assets, where the expenses might include broker and other transaction fees.
Why it matters:
Whenever an individual or business sells assets, it's important to make sure net proceeds, not gross proceeds, are being maximized. This means that perhaps the best sales price is not the highest price. The highest price does not always reward the seller with the most net proceeds. Transaction costs must be scrutinized as closely as the selling price -- if not more so -- since these costs are often hidden or obscured.