Do you need to sell your home? Maybe you are ready to buy your dream home and you need to sell your home to make it happen. If you are interested in selling your home, I am sure that you have thought “What will it cost me to sell my home”?
This article will help you learn what it will cost you to sell your home and help you understand the fees that are involved.
- Estimate Your Sale Price
You won’t know what your home actually sells for until you have a signed contract but to help you get an estimate of the costs to sell you will need to estimate a sales price.
All you need to do is figure out “Fair Market Value” for your home. You can do this yourself, or you can enlist the help of a Realtor.
We will use a sale price of $200,000 to help us come up with the estimated closing costs.
- Calculate the Title Fees
I have a form on my Seller section of the Resources page of my website that will help you calculate these fees.
Title fees include; Conveyance Fee or Transfer Tax, Title Examination, Title Insurance, Settlement Fee, and Deed Preparation. There may bee a couple other items included in this category like “Water Hold” but not all areas have this fee. My area does not have this.
For our example title fees are $2,780.
- Calculate the Prorated Taxes
My Seller Net Proceeds form on the Sellers section of the Resources page will help with this. Not all areas will prorate the taxes the same. In my area we pay taxes in arrears. So for my area we have to pay half a years tax plus the daily amount of taxes for each day from the last bill due date until closing.
For our example prorated taxes are $2,282.
- Calculate Broker’s Fees
This will include Realtor commission and any other fees your listing brokerage charges. Every brokerage is difference and almost all of them charge some kind of fee other than commission, but my company Nova Star Real Estate does not charge extra or “Hidden Fees”. Those fees can range from $250 to $1,000 depending on the company.
It is important that you know this upfront and this is why I suggest you use my Realtor Interview Questionnaire.
Commission is different for every property but for our example we will use 6% and we will go with my company that charges NO additional fees.
For our example Broker’s Fees are $12,000.
My company and many others offer graduated commission or other programs that can reduce the amount of commission you pay. Be sure to ask if your Realtor’s Brokerage offers these.
- Calculate Seller’s Contributions
This will include seller closing cost assistance to the buyer which can be up to 6%. It will also include seller paid inspections; Home, Radon, Mold, Pest or Termite, Well and Septic as well as Home Warranty.
Not all of these items are on every purchase agreement and the seller doesn’t normally pay for all of them. In my area the Seller normally pays for the septic inspection since in my area the septic is required to pass inspection to be able to sell your home. Buyers usually pay for the Home, Radon and Mold inspections if needed. The pest inspection is paid by either the buyer or seller.
For our example we will have the Seller pay 3% of the Buyers Closing Costs, Pest Inspection and a Home Warranty which totals $6,575.
The fees for each inspection or service will vary by area and company. Make sure you call local companies for pricing.
- Calculate Mortgage Payoff
This assumes you have a mortgage. If you have already paid off your mortgage and own your home free and clear, then Congratulations! If you are like most people and still owe on your mortgage, then you will have to find your payoff amount.
It will be best to contact your lender and ask them for the actual payoff amount and not just use the amount on the bill you receive. This is because the lender will add a daily amount of interest to the payoff amount and any fees involved.
For our example we will simply use and amount of $55,500.
- Deduct All Fees from the Sales Price
Now that you have figured out all the fees and costs involved in selling your home all you have to do is subtract them from the estimated sales price.
In our example we have…
$200,000 Sale Price
$2,780 Title Fees
$2,282 Prorated Taxes
$12,000 Broker’s Fees
$6,575 Seller Contributions to Buyer
$55,500 Mortgage Payoff
$120,863 Profit or Seller NET Proceeds
You may be thinking “It costs a lot to sell my home”. Some of the fees can be control like Broker Fees and Seller Contributions but others can’t like Title Fees, Taxes and Mortgage Payoff.
I could save you $1,000 on commission just by using our graduated commission program. Some companies offer this, and some don’t, be sure to ask your Realtor.
You can also save quite a bit of money with the seller contributions. When I have a listing and a buyer asks for help with the closing cost I usually advice my sellers to negotiate the costs back into the sale price.
So, in our example instead of just giving away the 3% or $6,000 you can adjust the sale price up to $206,000 to cover the costs. This way the seller isn’t just giving away money and the buyer still gets the cash they need to close.
Just by doing these two simple things the seller can put an additional $7,000 into their pocket!
Who wouldn’t want to save $7,000? If you enlist a great Realtor they will work hard for you and find a way to put more money into your pocket.
If you want more ways of making more money when selling your home read my article “How to Sell Your Home for More”.
Good luck with selling your home and if you have any questions please leave me a comment on here or send me an email and I will be quick to get back to you.
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