If you're thinking of selling your home, you are likely calculating how much in net proceeds you will walk away with. Perhaps you're hoping buy a new home and use your proceeds as a downpayment on your next home; perhaps you're hoping to have funds for something else, like going back to school or traveling. Regardless of your plans for your home's equity, the question of "how much will selling my home cost me?" is usually one that is top-of-mind.
We provide every client with a Estimated Net Proceeds To Seller sheet at various points of our relationship -- when discussing initial listing price, when an offer comes in, if any further concessions are negotiated during the transaction. We also go over your closing numbers with you in detail before closing, with the official numbers from the closing attorney, so there are no surprises at the closing table.
If you're just starting to think about selling your home and you're not ready to have a formal conversation with us yet, it's fairly easy to calculate what it will cost to sell your home, as most of the fees associated with a home sale are either (a) fixed, (b) negotiable with your real estate agent, or (c) otherwise in your control.
What Are the Fixed Costs To Sell My Home?
The fixed costs are the ones that you either (a) already know about or (b) are established by someone else (and over which you have no control, for example fees charged by your homeowner's association). It's fairly easy to find out these costs before you list your home. Those fees are:
- The balance(s) left on your mortgage(s) or HELOC (home equity line of credit). To find out the approximate balance(s) remaining on your mortgage(s) or any open lines of credit on your home, consult your most recent mortgage or payment statement(s) or call the mortgage holder(s). Keep in mind, this number will change based on the closing date of your home; with any subsequent payments you make between now and your closing date, your balance(s) will likely go down.
- Your HOA account statement letter. If you live in a neighborhood or complex with a mandatory HOA (homeowner's association) or condo association, the HOA will charge a fee for your account statement letter. This can range from $10 up to $250 or more, and you may not know this amount, but it is easy to find out. Email or call your HOA representative or contact person and ask them to send you the fees associated with selling your condo (and any fees that will also be charged to the buyer -- you will need those later to fill out your Community Association Disclosure statement).
- Wire fee for your mortgage payoff. The closing attorney will charge you a wire fee at closing in order to securely wire your mortgage balance(s) to your mortgage holder(s) close any loans or lines of credit you have associated with the property.
What Fees Can I Negotiate With My REALTOR®?
When you hire a REALTOR® to assist with marketing, negotiating, and coordinating your home sale, you will discuss the full amount of the commission you will pay them up front. Commission is negotiable. Keep in mind, many REALTORS® may have a set amount that they charge for their services, and they may not be willing to accept less; however, commission is always negotiable, even if the negotiation leads to you speaking with other REALTORS®. As with any fees you negotiate, it's important to weigh what services you are receiving for that commission...and to keep in mind that, as with almost anything, you get what you pay for.
What Fees May Come Up Later?
In the course of any real estate transaction, there are a number of other fees that you may agree to pay, as part of the negotiation with the buyer, to secure a contract and to get to the closing table. Your REALTOR® should, in your initial consultation, discuss with you the things that a buyer may "typically" ask for in a home like yours, in your market, in your price point. Your REALTOR® should be able to use sources like the comparable sales in your neighborhood, as well as their own experience and knowledge, to give you a good idea of what you should expect.
Some of the fees that a buyer may ask for, and you may find yourself negotiating, are:
- Seller contribution to closing costs. The buyer may, in their initial offer, ask for you to make a contribution to their closing costs. In Georgia, the bulk of the closing costs are the responsibility of the buyer -- the attorney's fees, the lender's fees, the HOA initiation fee, and more -- end up on the buyer's side, unless they are able to negotiate that the seller pay for some of those costs. Depending on the price point, type of property, and how "new" your listing is to the market, this type of concession to the buyer may be "normal"...or not. An experienced REALTOR® will have discussed this with you before an offer comes in.
- A home warranty. Many buyers ask for a home warranty, either in the initial offer negotiation or during the due diligence/inspection period. A home warranty will generally cost between $450 and $600, but the cost can go up from there if specialty items also need to be covered (like a pool, hot tub, or septic tank). The amount that you agree to contribute is, of course, negotiable. Click here to read more about what a home warranty is and how it might offer a buyer peace of mind.
- A termite letter and/or termite bond. Your home may already have a termite bond on it (or if you live in a condo or townhome, the HOA may hold the bond), which can transfer to the buyer at closing. If the bond is expiring within just a couple of months of closing, the buyer might ask you to extend it (depending on your service contract, this may cost around $200-300, but it could also cost you upwards of $500 -- check with your current termite company to review your annual cost). They may also ask that you provide a clear termite letter, which should cost around $50 (some companies charge $75-100, but this is more rare).
- Repairs or compensation (i.e., a contribution toward closing costs) in lieu of repairs. Repairs can be a wild card, of course, as we don't know what they might be or what an inspector might find. One way to anticipate this and to keep these costs low is to do a pre-market inspection, in other words, have a home inspection done and complete any major repairs before listing your home. Click here to read why we think a pre-market inspection (and pre-listing appraisal) can give you a leg up on your competition. While an inspector's job is to find something, if you have a well-maintained home without a substantial amount of deferred maintenance, your repair costs (or the money you offer the buyer in lieu of repairs) can be kept to a minimum. Click here to read the pros and cons of repairs versus compensation in lieu of repairs.
Items That May Either Be a Charge To You or a Credit To You
There is one final category of fees that will either be a charge to you or a credit to you, depending on the time of year that we close or the day of the month that we close (if you have a homeowner's association that charges a monthly fee). These items are your property taxes and your HOA dues.
- Property taxes. If your closing takes place between January and August or September, it's more than likely you haven't paid your annual property taxes yet, whether you pay them yourself or your mortgage company pays them from your escrow account. If your property taxes have not yet been paid, you will credit to the buyer your prorated amount of your annual property tax bill from January 1 of the year up until the closing date. If your closing takes place from September through the end of the year and your property tax bill has already been paid, then the buyer will credit to you their portion of your property tax bill from the date of closing through December 31 of that year. In short, each party will owe for the prorated amount of the property taxes for the part of the year they own the home. The closing attorney figures this proration as part of your total costs/credits at closing.
- Homeowner's Association dues. Generally, there are two kinds of HOAs -- an HOA with annual dues and an HOA with monthly dues. If you pay annual HOA dues, the proration will work similarly to your property taxes, above. If you are closing after the date on which you have paid your annual HOA dues, the buyer will credit to you their portion of the dues from the closing date through the end of the year. If you are closing before you have paid your annual HOA dues, you will credit to the buyer your portion of the total dues from January 1 until the closing date. If your HOA dues are paid monthly (or quarterly, etc.), the closing attorney will prorate based on the day of the month on which we are closing or based on the quarterly calculation. Once again, each party will owe for the prorated amount of the HOA dues for the part of the year (or the month or the quarter) during they own the home. The closing attorney also figures this proration, based on the information they receive in the HOA account statement letter (described above) as part of your total costs/credits at closing.
Selling your home may seem complicated, but having a good REALTOR® on your side and a knowledgeable and communicative closing attorney means you will be kept abreast of your costs and fees in a transparent way. Once again, we provide our clients with an Estimated Net Proceeds To Seller sheet at various points throughout the listing and transaction, and the closing attorney is responsible for ordering your official mortgage loan payoff statement(s) and HOA account statement letter. You should never feel that the amount of money you will receive at closing is a mystery.
If you're thinking of selling your home or would like to know approximately what your home could sell for -- and what your net proceeds could be -- in this market, give us a call today at 404-994-2181 or email Maura(at)BuySellLiveAtlanta(dot)com.
