How much does it cost to sell your house? Let’s chat about it! 🙂
I recently noticed a sponsored article on Facebook published by Angie’s List, and the title read “Hidden Costs of Selling a Home.” The title kind of annoyed me. As an agent, I am incredibly up front with my clients as to how much their net proceeds will be – I give them the worst case scenario so that they are pleasantly surprised.
So, what are the costs? Let’s go over them…
1. Most importantly, what’s the payoff of your mortgage? Contact your lender to get a payoff amount that I can put in your net proceeds sheet. Don’t forget about any second mortgages, or any home equity lines of credit! What are those payoffs??
2. Once we agree on a list price, and I give you an estimated sales price, I can then find an estimate for your owner’s policy. An owner’s policy for title insurance is needed. This type of insurance covers the property for the duration of ownership for the new buyers. This insurance covers any title defects, should they arise.
3. An estimate is also needed for closing costs for the title company. Most closings will include the closing fees being split equally between the seller and buyer.
4. Pro-rated taxes are also relevant. Most offers I write include pro-rated taxes being given as a credit to the buyer from the seller. In Indiana, we pay a year in arrears, but the seller is still responsible for any taxes owed while they owned the property.
5. Most buyers these days ask for a home warranty. My preferred company offers a good warranty for $500.00 that the buyer orders, but the seller pays for at closing. Additionally, if I’m aware of an older furnace or air conditioner that seems to be in good shape, but the age of the appliance may be called into question by the prospective buyer, I’ll encourage my seller to go ahead and order the home warranty which would include sellers coverage.
6. Again, most offers I write these days include closing costs for my buyers. Smart buyers will compensate the sellers for the closing cost dollar amount by increasing their offer for the amount requested. However, my initial net proceeds sheet to my seller will include the closing costs as a heads up so that they can expect that ask in offers.
7. Inspection items…now that is a guess. I try to calculate $1.00 per square foot for any inspection item costs, and sometimes it’s much, much less, and sometimes it’s much more. If the seller has lived at the home a long time, a good idea may be for the seller to have a pre-list inspection done by a qualified home inspector (maybe $500ish), and find anything that may be a deal breaker before the seller starts making plans for future homes and the like. Other factors for inspection items can be year of the home, recent improvements done that may be uncovered items that were then addresssed, etc. Some of those pesky issues can certainly hide from the naked eye. 🙂
8. Transfer fees charged by the neighborhood homeowner’s association are very prevelant. The HOA’s are sometimes managed by the neighbors, and those fees are usually very reasonable. However, some HOA’s are professionally managed, and can get very expensive. I like to research that number the best I can so that my seller’s dollar amount is more accurate. Usually, that transfer fee is split between the buyer and seller at closing.
9. Most important to my livelihood…the real estate commission. There’s a lot of things said about how much real estate professionals get paid in a transaction. Keep in mind that the amount you see on the settlement statement, yea…that’s NOT the amount that goes in my bank account. I pay a lot of fees to do what I do, and I won’t go into all of that because that’s a post all of it’s own. 🙂 Believe me, that I work for every penny I make. This is the most challenging, yet most rewarding career on the planet, in my opinion. I may not be curing cancer, but I am helping people realize their American dream of homeownership.
At the time of listing, I’ll prepare this seller’s net proceeds sheet so my clients are completely aware of the costs to sell their home. Additionally, I will prepare this same sheet with each offer (and counter offer that affects price) that my seller receives. It’s a HUGE help in the decision-making process for my seller!
I hope this information was helpful, as long-winded as I can get. Contact your favorite REALTOR at 317-480-7966 or firstname.lastname@example.org for all your buying and selling needs! Happy Tuesday!! 🙂
By Jill Curtis, talktotucker.com/jill.curtis