Do
You Know All the Fees You’ll Pay to Sell Your Home?
As the seller of
your home, you are bound to face a parade of taxes, commissions and other fees
that could cost 4% to 7% of your sale price.
So how will you
know how much money you will walk away with? Your REALTOR® will give you
a worksheet itemizing all of the charges you are responsible for. The
amounts vary by state, but most sellers will see several, if not all, of these
common fees:
Commissions
Real estate
agents work on commission. When you sell
your home you will pay a
commission—typically 6%—to your agent’s brokerage and the buyer’s
agent’s brokerage. The agents are then paid from their
brokerages.
Managing Your Mortgage
§ Mortgage balance payoff: The cost of repaying your home loan,
second mortgage and any home equity line of credit is deducted from the
sale price of your home.
§ Loan payoff fee: Some lenders charge
an administrative 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 will have to pay a fee to pay off your loan when you sell
your home.
Working With the Buyer
Depending on the real
estate market in your area and your buyer, you may have to negotiate and cover
certain costs for the buyer, such as:
§ Closing cost concession: After you and the buyer agree on the
final sale price, it isn’t uncommon for the buyer to ask for a closing cost
concession to cover their closing costs. This fee—typically 3%—is added to the
price of the house and then returned to the buyer after closing.
§ Repairs: Depending on the condition
of the house, the buyer or the
lender may ask you to cover the cost of repairs before closing.
§ Home warranty: Sometimes a seller will agree to foot
the bill for a home warranty that offers a protection plan for the buyer’s
first year in the home.
§ Termite letter: A document stating your home is
termite-free may be required in some areas.
Fees Paid at Closing
Once
you have struck a deal with a buyer, you will have other fees to pay
before you can finalize the sale. For example:
§ 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. You may be able to split these
costs with the buyer.
§ Title search fees: Title companies search public records
and give you a title insurance commitment. This document proves you have a
legal right to sell your home.
Updated from an
early version by Diana Lundin.
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