As the seller of your home, you will be paying taxes, commissions, and many other fees that will can cost you 4-7% of the sale price. In order to figure out how much money you will actually make on your home, after all fees are paid, you should know the standard fees. See: Real Estate Commissions: Who Pays? The amounts of these fees will always vary by state, but most sellers will absolutely see these common fees:
Real estate agents work on commission. As such, you will be paying them one. This commission will be split between your agent, and the buyer’s agent. Usually, this number is about 6% to their brokerage firms, who are the ones that ultimately pay them. Read: Closing Costs Explained.
If you do have a mortgage on your home, it is important to understand the charges you are going to face when you sell your home. Some of these include:
• Mortgage balance payoff: This consists of the cost of repaying your home loan, a second mortgage and any home equity line of credit is deducted from the sale price of your home.
• Loan payoff fee: Whether it seems fair or not, the reality is that some lenders will charge a fee when you pay off your mortgage or home equity line of credit.
• Prepayment penalty: If you have a prepayment penalty clause in your mortgage, you can expect to pay a fee to pay off your loan when you sell your home.
Depending on the real estate market in your area and your buyer, you may have to negotiate and cover certain costs for the buyer. Some of the typical ones include:
• Closing costs: After you and the buyer agree on the final sale price, it is normal for the buyer to ask for a closing cost to cover their closing costs. This fee is usually around 3%, and it is added to the price of the house and then returned to the buyer after closing.
• Any Repairs: Depending on the closing of the house, the buyer or the lender may ask you to cover the cost of repairs before closing.
• Home warranty: A home warranty offers a protection plan for the buyer’s first year in the home. Sometimes a seller will agree to pay for this, but a home warranty should definitely come up in discussion and negotiation throughout the selling process. Read: The Costs of Selling a Home.
• Termite letter: A document stating your home is termite-free may be required in some areas. To be on the safe side, it is best to have someone come and inspect your home for any termite damage, should the buyer claim it was there before they moved in. Always protect yourself.
Fees Paid at Closing
Remember that there will still be fees that you have to pay before finalizing the sale. See: Zillow List of Closing Costs & Fees. These fees include the following:
• Lien release document: If you owed money to a contractor, for court judgments, or for property taxes, a lien may have been placed on your property and you must pay that money before the sale can close.
• Recording fees: If you owe money on the property, you will need to pay this fee to show your debts have been fully paid.
• Notary fees: A fee charged by a notary to verify your identity and to make sure the documents are executed properly.
• Escrow fees: The escrow company acts as an intermediary between you and the buyer, ensuring the money is handled properly. Escrow agents receive money from the lender, pay off your mortgage and closing costs, collect deposits and give the proceeds to the lender. Sometimes, your buyer will agree to split these costs.
• Title search fees: This document proves you have a legal right to sell your home. The costs will vary.
Check out this video to help you understand more about real estate commissions: