Wondering what your net profit will be after you sell your home? As a seller, you’re likely to face a number of fees including taxes, commissions, and miscellaneous closing costs that could add up to over 8 percent of your home’s sale price.
Online net proceeds calculators are helpful in figuring your costs, though they might not cover every aspect of the sales transaction. In general, the items below are some of the usual closing fee descriptions you might encounter as a seller. Your lender, title agent, and Realtor can help you find actual estimates of what these fees typically cost.
If you still have a balance on your mortgage, your mortgage holder will calculate what you owe based on the expected date of your closing. Deductions from the sale price include your home loan, second mortgages, and home-equity lines of credit.
Loan Payoff Fee
Some lenders charge an administrative fee to pay off your loan.
A lien is a creditor’s right of ownership against a debtor’s asset or property that prevents its sale or transfer without paying off the creditor. In other words, if you owe money to a contractor or for court judgments or property taxes, a lien may have been placed on your property. Your house cannot close until those liens are paid off.
Ask your lender if there’s a penalty for paying off your loan early. This should have been disclosed to you when you originally took out the loan.
If you owe money on the property, you need to pay this fee to show that your debts have been fully paid.
You must pay all taxes you owe through the time the property was yours up through the day of closing. A taxing authority that bills taxes in arrears doesn’t require homeowners to pay their property taxes until the year after the taxes are actually incurred. Because most closings take place partway through the year, the seller of the home may accumulate property taxes that don’t become due until after the buyer has already assumed ownership. In such cases, the title company typically prorates the taxes, which involves calculating the proportions of the taxes that the seller and buyer each owe.
The total commission for marketing and selling your home is typically around 6 percent, with half going to your agent’s brokerage and half going to the buyer’s agent’s brokerage. The listing and buyer’s agents are paid by their respective brokerages. Brokerage fees can vary, but the amount is laid out upfront when you sign a listing agreement.
Notaries involved in the closing of your home verify your identity and make sure the documents are executed properly.
The title company oversees the closing as an independent party in your home sale. They ensure that the money in the sales transaction is handled properly—loans paid off, deposits collected, fees and proceeds paid. In Ohio, generally the title company is chosen by the buyer, with nominal fees to the seller. But if you’ve agreed to share closing costs with the buyer, this could be a more significant part of your cost.
A seller concession helps buyers pay their closing costs. The amount agreed to could be a percent of the closing cost or a flat amount.
Sometimes a seller will agree to pay for a home warranty that offers a protection plan for the buyer’s first year in the home.
Your final agreement with the buyer may include your expense in making specific home repairs. In lieu of making a home repair, sometimes the seller agrees to a cash back agreement where a specific dollar amount is either credited or given as a check to the buyer.
Real Estate Term of the Week
Conveyance: The act of transferring an ownership interest in real property from one party to another. Conveyance also refers to the written instrument, such as a deed that transfers legal title of a property from the seller to the buyer.