Cost Involved in Selling Your Home
There are various expenses associated with selling a home. Some fees are customarily paid by the seller, some by the purchaser and some are negotiable. It is a good idea to have a knowledgeable agent that can guide you through those different paths. We can discuss in further detail the specific items at the time you list your property and walk you through other negotiable fees when a potential buyer submits a contract to make sure you are getting the best terms possible throughout the transaction.
Below are some of the costs you can expect to pay as the seller.
All mortgages on your home must be paid off will need to be paid off, this includes lines of credit. You are not required to pay this prior to closing but it will be deducted at the time of closing. Most mortgage statements reflect the principal balance of your loan. This is not a total payoff amount. There are fees and interest that have to be calculated into the final amount. Every lender has different fees that are charged and each mortgage is different so it is important to keep in mind there could be charges associated with your payoff that are not being disclosed on your monthly statement.
This could range from a shortage in your escrow account, current months interest amount, release fees and possibly a pre-payment penalty. We can help you understand the payoff process and can usually give you a good idea of what your final payoff is.
Outstanding Liens and Judgments
In some scenarios there could be a lien on your home. For whatever reason such as a child support judgement, tax lien or mechanics lien. In any case any of those items will also need to be paid from closing to clear the title for the new owner. If you are curious as to any liens that you might have on your home we can easily have our title company run an O&E (Owners and Encumbrances report).
This report can be helpful to make sure nothing is clouding title that might be an issue later. If there is something that needs to be paid off, a final payoff statement is ordered so that the lien can be released similar to a mortgage payoff.
Title Insurance and Escrow Fees
The title company will also be the closing company or escrow company. They have two responsibilities. Their first goal is to act as a disinterested third party who will conduct the closing, working with the buyers lender to calculate both sides of the transaction, collect all monies due and disburse the funds to the appropriate parties.
This includes sending you lender the payoff funds and any other creditors. They charge a $250 real estate closing fee which is usually split between the buyer and seller. There will be charges for administering your payoff and sending the funds to your lender. They will also have to file the release with the county. Their other objective is to issue insurance to the new owner and lender for clear title.
The fees they charge for the insurance is based on the sales price of the home and whether or not you have had a policy written within the last five year period. Each title company has filed rates and we can further examine those at the time of listing.
Real Estate Commissions
The seller is typically required to pay the real estate commissions. This fee is an amount that the listing and buyer agents spilt. The commission rate is negotiable and we can discuss your options at the time of listing.
It is customary that many times a buyer may submit an offer asking the seller to pay a portion of their loan costs. Typically it ranges from 1 to three percent of the loan amount and is a negotiable item. This is quite common especially with the amount of VA loans in this area.
The government does not allow the veteran to pay some of the fees so the seller is asked to assist with some or all of them. This again is calculated at closing and will be credited to the buyer at closing if an agreement to pay those costs is reached in the contract.
Every situation is different but some of the additional fees we encounter are items like home warranties, recording fees, wire or overnight fees. When discussing your particular circumstance and actual offers received we will be able to give you a detailed breakdown and are able to provide you with a seller net sheet prior to closing with an estimation of the costs involved with your particular transaction.