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.
|
