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How much does it cost to sell a home?
Old 12-27-2011, 09:27 PM   #1
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How much does it cost to sell a home?

After you factor in transfer taxes, commissions, settlement fees and any other costs that a seller typically assumes, how much does the seller actually receive on a primary residence real estate sale? For example, if the seller sells a house for $250,000, how much does he actually walk away with? You can just let me know an average percent if you know. If, on a $250,000 sale, the seller actually walks away with $225,000, then that would be 10 percent for the various taxes, commissions, settlement fees and other costs that the seller would assume. Thanks for your advice.
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Old 12-27-2011, 11:05 PM   #2
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In my area the typical real estate commission is 6%. We sold our house earlier in the year. In addition to the real estate commission the main other costs were title insurance (about .6%) and various closing costs (escrow fees, messenger fee, tax certificate, recording fees, attorneys fees for the attorney the title company hired to do the deeds). Those various closing costs totaled about $750 and would have been the same for a cheap house as an expensive house.

Another thing that reduces the amount received but isn't really a cost of sale is real estate taxes. That is, we sold at the end of March so had to pay to the buyer our pro rata share of the annual taxes. That reduced our net amount but isn't really a cost of sale since we would have had to pay taxes even if we hadn't sold.

Other typical costs can be --

Transfer fee for HOA if you have one
Home protection plan -- In our area it is customary for the seller to pay for one
Title transfer fees -- these exist in some areas but not others.
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Old 12-27-2011, 11:15 PM   #3
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Sold a house in Chicago, price was 333K, agent commission 5%, after sale had 308k. Works out to 92.5%.
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Old 12-27-2011, 11:24 PM   #4
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Consult a few realtors about listing your property. They should be able to give you a very close estimate.
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Old 12-28-2011, 12:00 AM   #5
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That's so local it's hard to generalize. You say "typically" but I've seen it vary from one county to the next, let alone between states.

Most realtors split a 6% commission but even that's subject to negotiation.

Like W2R says, you want a realtor to go over a typical closing document with you showing which line items are paid by the seller and which are paid by the buyer. Then you want to know which ones you can dicker on.
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Old 12-28-2011, 08:14 AM   #6
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MD's closing costs are considered high. The state charges a transfer tax of .5%, and each county charges on top of that.

Maryland closing costs, transfer taxes | MD good faith estimate

Sample:

Recordation
Tax $5.00 per thousand
Transfer Tax 1.5% (1% County + .5% State)
Pro-rated property taxes, water and sewer (if applicable).

Real estate agents in these parts demand 7% (in a better market, one could negotiate 6%). Then there is the cost of "staging" your house - often, the owner has to move half his belongings to rented storage so the house won't look like anybody lives there (heaven forfend).

In my view, everything that comes out of your pocket is part of the cost of selling your house. Don't forget the cost of upgrades and repairs to make the home attractive to buyers. Obviously this will vary from home to home, neighborhood to neighborhood. It is amazing what you will have learned to live with - or not even notice - that can cause a buyer to reject your house, or offer far less.

I would also factor in whatever it will cost to move into the new home/apartment/condo.

These are things that keep us up at night, regarding selling our current home and moving to a more retiree-friendly (in terms of taxes) state.

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Old 12-28-2011, 08:50 AM   #7
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Pflieger Realty Group NJ guide if it helps, I just Googled...
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Old 12-28-2011, 10:03 AM   #8
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As I recall, we cleared just about 92% from sale price to check in hand. Keep in mind (as pointed out above) some closing costs would be owed anyway, such as accrued fees and taxes, etc.

Our realtor offered us a 6% standard fee which included the services of a "stager" and additional marketing services or 5% for no "stager". We took the 6% and got several offers within the first 3 to 7 days - accepted almost immediately. Closed within about 40 days of listing.

Not included in the "official" numbers are the "cost" of fixing up the house for sale (from minor cleaning and painting to major plumbing/roofing/structural fixes, etc.) Also, a "cost" is what you negotiate in price. Say you want to sell at $200K and you think that is a fair price. If the "market" says the price is actually $185K (the price you actually have to take to get the property sold) how do you account for that in your "cost"? Just some things to think about.

Forgot to mention the cost of being on the market. We calculated a figure that our place would cost us for every month it did not sell (electric, association fees, taxes, cleaning - to keep it salable, maintenance, trips back and forth to the property, etc., etc., etc.) It adds up quickly which may be a motivator in setting the price as close to market as possible. We had a "starting" price which we understood would be negotiated down. We had a "to sell at price" (what we would accept within the first month or so) and a "back-up" price at which we would be willing to take if the house was sitting on the market unsold for months. Below this final price we would have rented the property out for a couple of years or so. Turns out we had done our homework. The appraisal came in at 0.5% lower than our "to sell at price". We split the difference with the buyer and had papers signed within a week.

YMMV
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Old 12-28-2011, 01:46 PM   #9
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Sold our house ourselves back in October. Only closing costs were for our attorneys (about $400) and some recording fees ($25). Broker commissions in our area are about 6%, but most brokers are willing to reduce that if there is no other broker involved.
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Old 12-28-2011, 02:50 PM   #10
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Good deal! How many times did you show your house before you found a buyer?

A.

Quote:
Originally Posted by pb4uski View Post
Sold our house ourselves back in October. Only closing costs were for our attorneys (about $400) and some recording fees ($25). Broker commissions in our area are about 6%, but most brokers are willing to reduce that if there is no other broker involved.
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Old 12-28-2011, 04:20 PM   #11
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I've usually figured on 8% of sale price as a rough estimate of expenses (commissions and closing costs) assuming you use a traditional real estate agent at the usual rate (which is technically negotiable).
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Old 12-28-2011, 04:36 PM   #12
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Just try negotiating a lower rate around here. Then wonder why your property isn't being advertised or shown. Here, there is unsubtle pressure to add an "incentive" (starting at $1,000) on top of the 7% commission! Every agent is quick to remind you that he or she is splitting the 7% with other agents, thus each of them requires an "incentive" to do their job - since After All, nobody can be expected to do much for a measly 1.75%!

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at the usual rate (which is technically negotiable).
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Old 12-28-2011, 04:37 PM   #13
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Just try negotiating it around here.
It's harder when homes are taking months (or years) to sell. In a red hot market when homes may sell within a few days, the sellers are in a stronger negotiating position.
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Old 12-28-2011, 06:28 PM   #14
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Good deal! How many times did you show your house before you found a buyer?

A.
Once.

Actually, we had moved to our new home back in May and spent the summer weeding out from 25 years at the old home. Just before we were going to list the property with a broker, my wife put an ad on craigslist. A young newlywed couple looked at the house, loved it and made us an offer. The first was lowball offer we rejected. They then made us another offer with no contingencies other than a home inspection that was about what we expected to net out selling it through a broker so a bird in the hand was worth two in the bush.

We had been under contract the summer of 2010 but the buyer needed to sell their house and it didn't sell so the sale fell through. We've been trying to sell on and off for a couple years. Probably showed it to 15 parties over that time.
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Old 12-28-2011, 06:46 PM   #15
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When my house was on the market, the realtors' fees that were suggested by my realtor (with no negotiation) started out at 4% for everything over $100K, 6% for the first $100K. Also he made it clear that he would work with me on this if necessary to close a deal.

Since that time, his large agency has separated from the well known national chain with which it was associated and has become independent again. So, I am speculating that the realtors' fees may have decreased further due to the decreased overhead.

This is a terribly difficult time to be a realtor here. The real estate market is not doing well.
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Old 12-28-2011, 11:53 PM   #16
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Quote:
Originally Posted by Amethyst View Post
MD's closing costs are considered high. The state charges a transfer tax of .5%, and each county charges on top of that.

Maryland closing costs, transfer taxes | MD good faith estimate

Sample:

Recordation Tax $5.00 per thousand
Transfer Tax 1.5% (1% County + .5% State)
Pro-rated property taxes, water and sewer (if applicable).

Real estate agents in these parts demand 7% (in a better market, one could negotiate 6%). Then there is the cost of "staging" your house - often, the owner has to move half his belongings to rented storage so the house won't look like anybody lives there (heaven forfend).

In my view, everything that comes out of your pocket is part of the cost of selling your house. Don't forget the cost of upgrades and repairs to make the home attractive to buyers. Obviously this will vary from home to home, neighborhood to neighborhood. It is amazing what you will have learned to live with - or not even notice - that can cause a buyer to reject your house, or offer far less.

I would also factor in whatever it will cost to move into the new home/apartment/condo.

These are things that keep us up at night, regarding selling our current home and moving to a more retiree-friendly (in terms of taxes) state.

Amethyst
Why would the seller pay transfer and recordation taxes? I would normally say the same for title insurance, but we had bad experience that has made me reconsider.
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Old 12-29-2011, 07:56 AM   #17
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"Traditionally," buyer and seller split these expenses. But these days...ehhh...ever hear of "closing help"? That is the current euphemism for "paying the buyers' closing costs."

Reading my comments, I realized I have developed an extremely jaded view of real estate. Seems everything about it involves the worst aspects of human nature: greed, deception, boasting. I think I'll just stay out of the RE discussions from now on, since I don't care for the way I sound.

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Why would the seller pay transfer and recordation taxes? I would normally say the same for title insurance, but we had bad experience that has made me reconsider.
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Old 12-29-2011, 01:53 PM   #18
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8% or so is a good estimate in Florida. Brokers want 6%. Title insurance is another expense that can be negotiated as to whether buyer or seller pays. The state charges some taxes that are charged to the seller usually.
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Old 12-29-2011, 02:31 PM   #19
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Our broker wanted 5% in CA in 2008. He earned his keep - professional photographs, full color glossy brochure, paid for a staging artist to consult us, and gave us numerous tips on how to best present our house. After a couple of months of heavy decluttering and staging, we put it on the market on a Tuesday, and we had an offer by Saturday. The open house on Sunday wasn't even necessary and we had hundreds of glossy brochures left over! Oh, and we got more than we expected too as he priced it well.

In this market, you can be lucky with a for-sale-by-owner but my feeling is that the buyer's agent quickly susses out that the price should be reduced by the 3% you are not paying your selling agent, so why not just have your own agent? And stage, stage, stage until you are blue in the face (watch HGTV's Designed to Sell for ideas).
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