Timothy Waller's August 16, 2018 Newsletter
Closing Costs What Sellers Should Know
Hooray! Your home has officially sold and you’re about to receive a fat check for the exact price you put it on the market for…right? Unfortunately, sellers don’t typically pocket the price a buyer agrees to pay for their home. The closing costs that are factored in at the end of the transaction can really add up.
It’s important to bake those closing costs into the asking price. Check out the tips below to assist sellers in determining how much money will be left over once the transaction is complete.
Paying Your Agent
Typically, a real estate agents' commission is 6% of the home’s selling price. Of that percentage, 3% will be given to the buyer’s agent and 3% will go to the seller’s agent—it’s a fair, 50-50 split. For example, if a house sold for $400,000, 6% of that would be $24,000 in commission with $12,000 going to each agent and then be split again with each agents' broker.
Seller Closing Costs
In addition to paying the agent, sellers can sometimes agree to help pay for some, if not all of the buyer’s closing costs. This includes things like the survey fee, pest inspection and an appraisal fee. According to Zillow, buyers pay on average,$3,700.00 in closing costs.
Closing is also the time for sellers to pay off the loan on their home. Your loan payoff may be a little higher than the balance on your loan due to prorated interest and you might owe a prepayment penalty for paying it off before the end of the term. If you have a home equity loan or line of credit, it will have to be paid in full at settlement as well.
Sellers can expect to pay for the deed of the home, homeowner association fees, if there are any and prorated taxes. They are also responsible for utilities such as oil in the heat tank, water, sewer, electric and gas. Sellers will pay for half of the Title Company and search fees.
Don’t forget about the attorney fees that can range from $1,000 to $1,500. These fees and the type of transaction should be discussed prior to hiring the attorney.
The state of New Jersey has a Realty Transfer Fee (RTF). This fee is based on the sale price of the home and is typically collected at closing by the title company to then be allocated throughout the counties in the state. The elderly, physically disabled and low to moderate-income households receive a discount on this fee.
It’s important for a seller to be prepared prior to settlement to pay for home inspection repairs ordered by the buyers. The sellers reserve the right to put a dollar cap on the amount they are willing to pay for in repairs, which can be specified in the sales contract by their Realtor.
If the repairs exceed those costs, then both parties may opt to cancel the sales contract if a mutually agreeable remedy to fix cannot be reached. A seller should also be prepared prior to settlement to pay for home inspection repairs ordered by the Buyers.
Advice From The Professionals
RE/MAX Properties Unlimited Agent, Natalie Manata recommends, "When listing your home for sale, consider purchasing a home warranty to offer prospective buyers. The low cost of the warranty, which is typically only paid at closing, can save you thousands of dollars during the home inspection repair negotiations. Also, f the seller is obtaining a certificate of occupancy they should submit an application with ample time to spare because some towns may limit the days they inspect a home and can be backed up, thus delaying closing which can sometimes be costly”.