So, you are listing your house for sale. How much money are you going to walk away with? Aside from paying off your mortgage and any other loans you have on your house, the next biggest cost you have to consider when selling your home is the real estate sales commission. After that, you have all the costs that sellers usually pay through escrow when selling a house. All these costs add up. When you sell a house, you need to be ready to pay close to 10% of the final sales price of your home.
Real Estate Sales Commissions
Real estate sales commissions range from 5-6% of the sales price of your house, depending on your market and more importantly on what you negotiate with your real estate agent.
If you recently refinanced or bought your house, you may have a prepayment clause. Look at your trust deed to see the terms of that. A prepayment penalty can carry a steep price tag. It makes sense to find out if you have one before you decide to sell your house.
Prorated Property Taxes
This can take a big bite out of your final proceeds. Don't fret, as you would have had to pay them anyway. It's just that most people, myself included, forget to figure the prorated property taxes due on the date of the sale. In California, that can be a big number, typically a few thousand dollars, especially if the house sale is close to the 6-month due date for property taxes.
Typically, in a retail house sale, the seller of the house pays for the title insurance on the property. This is typically a non-negotiable item as lenders require title insurance on properties that they are lending on.
Transfer Taxes and Recording Fees
Thse taxes and fees are imposed by the state and local governments. It's how they fund running the government and there is no way around paying them.
Escrow or title companies, whichever is handling the transaction, will charge fees, too. Escrow companies are licensed and bonded in the State of California, so it's not suggested to sell a house without using an escrow company, especially to save on fees.
Most buyers will ask for a home warranty in their offer to you. This will cover a lot of things that can go wrong with the property right after they buy it. Expect to pay $500 to $650 for this. It's a little more with a pool, spa or other additional structure on your property.
Termite Inspection, Fumigation and Repairs
Lenders also require termite fumigation and the repairs associated with termite damage before they will allow escrow to close. This can cost anywhere form $3,000 to $8,000 depending on the damage and size of the house when performing the fumigation.
Repairs and Credit for Repairs
Remember when you agreed to give the buyer a credit instead of fixing the items they submitted on their "Request for Repairs"? Well, it's coming out of your proceeds, so be prepared.
Bottom line, these costs add up. On a $500,000, you are talking about $50,000 in closing costs, more if you had to repair costly fixes, gave the buyers a credit for repairing it themselves and even more if you remodeled or had major repairs completed before you even listed the house for sale.
I would say that this is one of the main reasons that sellers call me, besides mortgages, other loans and property taxes, I pay for all the other fees (and there is never a commission involved). To avoid all of these costs is a relief, especially when you don't know what the final cost is going to be. Sometimes, the costs just keep adding up with no end in sight. Regardless of what you decide to do, do the math and give yourself the honest number for how much money you will have at the close of escrow.