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Now that you have decided to sell your home (or at least are thinking about it) what can you expect to face in terms of expenses? Here are some of the costs associated with selling a home that you will most likely encounter. We have assembled an example based on a home with a list price of $925,000 to help with perspective.
Commission
The biggest expense aside from an existing mortgage will be your commissions. As a seller, you are required to pay the buyers’ agent commission as well as the sellers’ agent commission. The range varies from state to state and locale to locale but in general it is about 3% on each side for the listing and broker fees. For our example of a $925,000 home, the commissions would add up to $27,750 on each side of the table (for a total of $55,000).
Document Fees
Though these may seem small, the expenses incurred to formally document the sale add up. You will pay a county recording fee, document preparation fee, a deed tax fee plus an escrow fee that ends up being about $2.00 per every $1,000 of sales price plus an additional $200 on top. In addition there will be inspection fees plus taxes payable by the seller as well.
When you add up the commission, escrow, title insurance, natural hazard disclosure, termite inspection, prorated property taxes, county transfer fees, Homeowners’ association fees and most importantly, their mortgage(s) on the home, it gets expensive. In our example, assuming the homeowner has two mortgages on the home totaling $250,000 plus with the extra fees mentioned here, so far their expenses add up to about $59,000 plus the mortgages.
Additional Expenses Incurred
If you had your home refinanced and you are selling within the prepayment penalty phase there will be a charge associated with that transaction. Likewise some communities have a special assessment charge that is set up to accommodate particular community-wide enhancements such as a new paved road or parking lot. These expenses are usually charged through escrow and in our example we are looking at about $2,000 in special assessment charges. Property taxes, seller concessions such as a home warranty or closing costs also add up.
Considering all these expenses (more or less depending on your property), this example demonstrates just under $260,000 for all selling expenses. Assuming the home is sold at its list price of $925,000, we are looking at a net proceed amount of amount $609,000.
The bottom line is that sellers should be prepared. That is why it’s essential to work with an experienced Realtor. One that can help you understand the expenses at hand and reconcile the often difficult to understand expenses that come with selling your home. We invite you to contact us today to learn more.
