Real Estate Trends & Advice

What Does it Cost to Sell?
By Jim Palmer Jr.

Frequently real estate professionals are asked by property owners to provide a Market Analysis (CMA - Comparable Market Analysis) prior to their actual listing of a property.  Along with that market-sales analysis, your broker should always provide an estimate of selling costs. This allows you to visualize what your actual net proceeds will be, minus any encumbrance or liens.   Many brokers skip this important part of the analysis because of laziness, ignorance or fear of liability if their estimate is wrong. 

Closing costs for sellers usually end up in the 9-11 percent range (depending on the percentage of real estate commission charged).  Rather than guessing or using such a general calculation, ask your broker to provide a more detailed cost analysis that will allow you as a seller to be more informed of the true costs to sell. 

Based on the purchase price or projected sales price (in the case of a CMA), the closing costs for the seller would be calculated using the following costs; State excise tax, Title Insurance, closing fee levied by closing attorney or title company closer ($750 - $1,200 for most transactions), real estate commission ( a negotiated percentage of the sales price), prorated property taxes, septic pump and certification, well tests, recording fees, open space compensating taxes (if removed from current tax designation), and maybe a portion or all of the buyers closings costs.

If you know what your mortgage balance is you can calculate what your approximate net proceeds should be, but be cautious on that topic!  The number that some sellers offer to the broker for what they think the payoff amount is on their loan is often not accurate.  They sometimes forget that there will be interest to pay that is above and beyond what the balance shows, or they have misinterpreted their statement somehow.  In one transaction the seller gave the listing broker a payoff amount that was almost $100K lower than the actual payoff figure.  Remember that the broker only has the information you provide.  Their analysis of the costs and proceeds is only an estimate.

This information is often quite enlightening!  In the current market potential sellers are often surprised at the amount of equity they have accumulated.  In a down market that information is critical because sellers won’t like bringing money to the closing table in the case where they have less equity than they thought.

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Jim Palmer, Jr.
509-953-1666
www.JimPalmerJr.com

See my blogs at:
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