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The Costs of Selling a House

As the prices of homes have continued to rise, many homeowners have been eager to jump into the fray and cash in on the roof over their head. Before becoming a seller, however, it is important to calculate just how much selling the home will really cost. Things like paying off the mortgage loan, paying a commission to the broker, and other factors can really add up, and those costs can eat into your profit. Some home sellers may realize they can't afford to sell after they do the math!

It is important for every potential home seller to take stock of how much equity he or she has built up in the home, and the amount needed to pay off the mortgage. After those figures are in hand, take a look at what similar properties in your neighborhood have sold for. This should give you a fairly good idea of what you can expect your home to bring on the open market.

Loan Payoff

The first factor to look at is how much you owe on your current home loan. The total owed will be greater than the last statement balance, because the interest on the loan is paid in arrears. This means that the mortgage payment you made in March paid off February's interest. It is important for potential sellers to assume they will owe the current balance, plus an additional month's worth of interest, at the closing.

Moreover, make sure that your lender will not assess a penalty for paying off the loan early. Some mortgage loans come with such an early payoff penalty. It is important to find this out, and to get it in writing. It is also crucial to consider home equity loans and other liens that may exist, as these items will also need to be paid at the closing.

Broker's Commissions

The commission paid to the real estate company is typically the biggest expense involved in selling a home, averaging between 5-7% of the selling price. It is a good idea to shop around at several different real estate agencies to determine which one offers the greatest value for the money.

There are of course limited service brokerage firms, and firms that help sellers market their own homes. While the commissions charged by these firms are substantially lower, the do it yourself approach will not be suitable for every seller.

Closing Costs

Next to the commission on the sale of the home, closing costs are often the biggest expense of selling a home. One of the costliest parts of closing costs is often title insurance. In most cases title insurance ranges between $900 and $1,500, and varies according to region, and rise with the cost of the home.

Other common closing costs include pro-rated property taxes, document preparation fees and attorney costs. These costs will also vary, and it is important to get a firm estimate well ahead of the closing date.

Other Fees Negotiated by the Buyer

Buyer negotiated fees are becoming more common as the hottest real estate market in many decades begins to cool a bit. Some of the most commonly seen buyer negotiated fees include a home warranty paid for by the seller, the cost of repairs needed to make the sale, and the cost for a thorough home inspection. It is important for both the seller and the buyer to remember that virtually any part of the real estate contract is negotiable.

Moving Costs

Many sellers forget to factor in the cost of the move itself, but the moving costs can add up quickly, especially in the case of a large house with lots of expensive furniture. It is essential to get an estimate from a reputable mover and to factor those costs into the final decision to sell the home.



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