Common Fees You Will Encounter When Selling Your House
Buying your first home is usually a combination of excited and overwhelmed feelings. Selling that home can be exciting and overwhelming as well. If you are hoping to make a profit off selling your home, you are likely doing some calculations to see what you will walk away with. If your sale price is $300,000 and you have $150,000 left on your mortgage to pay, you may think you’ll leave with $150,000 in profit for your new home. But you do need to factor in the closing costs and other common fees. Although most sellers think of closing costs as the buyer’s responsibility, sellers will have them as well.
Sellers Will Pay Closing Costs Too
Closing costs will vary based on where you live, how much of your existing loan will be paid off, and other factors. Generally speaking, homeowners will pay somewhere between 6-10% of the sale price of their home in fees. Rather than being responsible for these closing costs in cash, it will be deducted from the sale price of the home. Commission, loan payment fees, taxes, title, and insurance fees are standard, but sellers may also be responsible for repair bills or credits to the buyer for issues found during an inspection.
Real Estate Commission
The largest cost for sellers is the commission for the real estate agents. A standard commission is 6% of the sales price, which will be split between the buyer’s and seller’s agent, although these fees can occasionally be negotiable. At that rate, for a $300,000 sale price, the commission would be $18,000. If you as the seller choose a FSBO (for sale by owner), you may still need to pay the buyer’s agent commission, which can be as high as 3%, depending on your negotiation. While using an agent will take a percentage of your sale price, there are many benefits of having a real estate agent on your side.
Loan Payoff, Taxes, Title, and Attorney Fees
In addition to the commission, there are other closing costs for the seller. You may be required to pay a prepayment penalty for paying off your mortgage early, or the payoff on your mortgage may be higher than what your remaining balance is because of the prorated interest. It’s important to speak with your lender about what to expect at closing. The seller is also required to pay transfer taxes, transfer fees, and any outstanding property taxes. The seller will pay for the title insurance. If you are having an attorney represent you at closing, you will pay attorney fees as well.
Benefits of Using a Real Estate Agent
Some sellers look at the real estate commission and feel it would be a smarter financial decision to sell their home without an agent. However, this is usually not true. The benefits of using a real estate agent outweigh the commission you will pay as a seller. An estate agent can help you in preparing your home for listing, can create the right listing to interest buyers, can assist you with pricing your home accurately, and can ensure that the negotiations get you the best possible price for your home. Your home will most likely sell much more quickly with an agent than it will without. Other benefits of using a real estate agent include access to professionals in your agent’s network, expert understanding of the contract and escrow process, and high-quality buyers that your agent can find. If your home sells quickly and for a higher price than you could get on your own, you will very likely still come out better financially, even after paying the commission.
Selling your home does come with costs. In addition to all the costs associated with closing, you may also have invested money in staging, repairs, photography, and other improvements to make your home more attractive to buyers. It can feel like the costs add up quickly, but knowing what to expect and the benefits of using a real estate agent can help you sell your home without stress. Contact Amberwood Real Estate to speak with our team of professionals. Our courteous and experienced agents can help you find a great house, and help you sell your home quickly.