This is just too good not to re-blog. Great article from Colleen McConnell.
This strategy involves calculating all the seller's expenses and then basing the price on that, to ensure that the seller makes a profit, or at the very least, breaks even. This method of pricing is often used by un-informed sellers when there is little or no equity in the home and the seller doesn't want a short sale on their credit and/or can't afford to bring money to closing.
Typical expenses for sellers include:
- Brokerage fee for both listing agent and buyer's agent
- Documentary stamps on the deed
- Pro-rated property taxes
- WDO (wood destroying organism) inspection and repairs
- Mortgage satisfaction and recording fee
- Payoff of mortgage(s) and equity line(s) of credit
- Home repairs
Unfortunately for the seller, this strategy probably won't work unless the price developed in this manner is roughly equivalent to or less than market value.