Are you are aware of all the fees you’ll be paying as the seller at your closing? Familiarizing yourself with the expenses will make for an easier transaction and most importantly you’ll avoid any unexpected costs at the closing table. Unprepared sellers often experience seller’s remorse, which simply means you find yourself filled with regret about the deal you made. So, what fees will be subtracted from the sales price of your home? Here’s a list of typical seller’s closing costs that are deducted from your profit:
Pay Off on Mortgage Balance
If you took a loan out to buy your home, you are required to pay off the balance of that loan upon the sale of the property.
Prorated Property Taxes
Sellers are required to pay the estimated property taxes during the period of time that they owned the home that year. For example, if you close on May 1 the seller pays the taxes from January 1 to May 1. The credit will appear on the settlement statement for the buyer who is then responsible to pay the full tax bill when it arrives later in the year.
Real Estate Commissions
If the buyer and seller are both being represented by real estate agents, each agent will charge a commission for their services. Traditionally, commission fees range from 3%-6% of the sales price. As the seller you may want to negotiate a lower commission rate with your own agent.
Recording Fees
A deed is the document that legally transfers the title/ownership of property from one person to another. Normally a seller pays the fee charged by attorneys and title companies who prepare the deed. In addition, the county government will charge a fee to record the deed in their public records and a seller is responsible to cover that cost as well.
Survey
If the buyer is getting a mortgage, their lender will most likely require an up-to-date survey and typically the seller pays for the completion of the survey.
Seller Concessions
The housing market is competitive so sellers often try to attract qualified buyers by offering to pay for all of, or a portion of, the buyer’s closing costs. If you plan to do this, be aware that many loan programs limit a seller’s contribution to 3 percent. Be sure to consult with your realtor and always specify the exact terms of your contribution in the sales contract.
Home Warranty
It is not uncommon for a seller to pay for a one year home warranty for the buyer. This type of residential service contract can cost several hundred dollars and it provides coverage on appliances and mechanical items in the house.
Home Repairs
If your home is in need of any upgrades or repairs to get it into “move-in ready” condition, you are responsible for the costs associated with those repairs.
This list represents the main fees associated with selling a house. However, there could be other “hidden” fees so before accepting a buyer’s offer you should ask your realtor to prepare a Net Sheet itemizing the fees. Although it’s just an estimate, a Net Sheet will give you a very good idea as to the actual costs for which you will be held responsible. The more you know the better decision-making power you will have.
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