Costs involved in Selling a Home

When you are ready to sell and talking with a REALTOR about listing the house, s/he should include the estimated cost involved in selling at the listing appointment. What I typically do is provide a breakdown at 3 or 4 different price points from projected sale price to worst case scenario. To date, my sellers have never been confronted with a worst case scenario net, but I believe it’s important to include that information up front since we should all work towards the best while being prepared for the worst.

Knowing these costs up front helps in preventing any surprises down the line. Real estate transactions are delicate matters. Scenarios can change from day to day based on inspection results, appraisal results, buyer financing, lender productivity and more. Eliminating surprises should be a priority for an experienced agent. Surprises in day to day life can be exciting and fun. Surprises in real estate transactions typically are not.

Educating a seller on the costs to sell up front is one of the steps I take to eliminate surprise. Imagine going through the process of selling and reviewing the settlement statement (HUD) 30-45 days after entering into a contract and learning you are walking away with less than you anticipated. That’s not a fun surprise by any means. That is why it is important to know these numbers at the time of listing.

Since I believe knowledge is power and in educating sellers and buyers, I am going to share these costs with you.

Cost to sell a home in Central Florida are as follows:

Real Estate Commission this is what you and your agent agree upon. The commission is typically shared evenly between the listing brokerage and the selling/buyer’s brokerage.

Documentary stamps on the deed. This seller cost is based on the sales price. It is calculated at 70 cents per one hundred dollars. Example: Sale price of $250,000 = $1750 in doc stamps on the deed. (250000 x .007)

Taxes are pro-rated. (If your taxes and insurance are escrowed into your mortgage, those escrows will be returned to you by your lender once the mortgage is paid (satisfied) – typically 45-60 days after closing.) In Florida, taxes are paid in arrears. Tax bills for the current year come due in November of that same year. At closing the taxes are pro-rated to reflect this; a seller will give the buyer a credit towards taxes for the number of days the seller had ownership in the house. Example – 2015 taxes total $1800. Property sells on May 1, 2015. Tax bill comes due on November 2015. Seller gives buyer a credit of $600 for January-April 2015. Buyer pays the entire tax bill when it comes due.

Owner Title Insurance and fees are also a cost in the transaction. In this region, the seller pays for and conveys clear title to the buyer. The cost of insurance is based on the sale price of the property. If a seller is selling a home that was owned for 3 years or less, a re-issuance credit may be available. The chart below shows title insurance fees without any credit being given.

Courtesy Metes & Bounds Title Co.
Courtesy Metes & Bounds Title Co.

Title fees vary from company to company and include costs for title search, lien search, recording fees, government fees and the settlement fee.  As a rule of thumb, I quote $725 for title fees.

Home Owner Association (HOA) dues is another item that is pro-rated. In order for the dues to be properly pro-rated, the title company must order an estoppel letter from the HOA. The estoppel letter shows what the seller has paid for HOA dues to date, any outstanding balance or fines, etc. HOA’s charge for this estoppel. These charges vary and generally run between $50-$500. I have seen them to be $150 on average.

And those are the standard costs of selling a home.

Simplified it is as follows:

$250,000 Sale Price
Commission                                                                       $X
Taxes $1800/yr (pro-rated: estimated closing 5/1/15)   $600
Doc stamps on deed (.70 per $100)                               $1750
Title Fees ($725) & Insurance ($1325)                           $2050
Cost to sell                                                             $4400 plus X***

***HOA estoppel fees (cost for payoff from HOA to title co.) generally run between $50-$500. I have seen them to be $150 on average. This cost has not been included in the cost to sell calculated above as the exact amount of the estoppel fee for your HOA is not known.

Calculating the cost to sell is not especially tricky. As I mentioned previously, any agent you interview should have these numbers available and should be providing these figures to you at the initial meeting. If s/he is not, then you are not getting the full picture. Hopefully, I have made these costs clear and easy to calculate. If you have any questions regarding the cost to sell, feel free to get in touch with me. I’d be glad to assist in any way I can.

Home Buyers: How to Win in a Multiple Offer Situation.

It’s a great time to buy real estate — really.  I know the real estate world was touting that line in their marketing campaigns a couple year back as prices were plummeting and tax credits were being offered to first time home buyers.  I didn’t really buy into it then.  I truly believe it is a great time to buy now.  I’m confident we have seen the bottom of the real estate market and are well into the beginning stage of recovery.

It’s ideal to buy as prices are going up, and with interest rates hanging in the 3s, now is a great time to grab a piece of the pie.market on fire

There are challenges in purchasing in today’s market.  With inventory low and demand high, multiple offers are common place – especially in the Orlando area market.  On top of that, cash is king and as of late nearly half of all real estate sales were cash deals

What does that mean for the average buyer, dependent on financing, and ready to buy?  It means be ready to act, swiftly and with precision.  It means stay positive and keep in mind that everything happens for a reason. It is possible for a first time buyer to beat out the hedge funds, investors and others with deep pockets.  It may take a little more time and the possibility of being out bid a couple of times before securing a home exist.  (This is where staying positive and knowing everything happens for a reason comes into play.  If the winning bid wasn’t yours, then there is a reason that house was not meant to be.  I am a strong believer in this and have seen this theory proven first hand time and again.)

I have had a number of buyers beat out cash offers – strong cash offers.  It is being done, and I am about to tell you how.

First and foremost, make your first offer your strongest offer.  Agents are not required to Lisa Jones Sale Pending Orlando-001disclose whether a property has multiple offers on it.  Don’t assume yours is the only offer, and don’t assume you will be given an opportunity to negotiate.  It’s quite possible you will not be given the chance.

Often times I have seen buyers disappointed that their offer was not the winning offer.  I have heard the phrases, “I should have gone up $5000” more times than I would like to count.  Honestly, $5000 in the grand scheme of things will not make a whole lot of difference in a mortgage payment (maybe $20- $30).  It could make the difference between an offer being accepted or rejected.  Knowing you gave your all should provide comfort if your bid is not the winning bid.  This was you know you gave your best and don’t keep yourself awake at night wondering “what if” or “would’ve should’ve could’ve.”

Strongest offers also include things like strong escrow.  Your good faith deposit needs to be attractive.  (1-2% of the purchase price is customary in the Orlando area market).  Putting $500 or $1000 down on a $100,000 purchase does not say “I am a serious buyer” to a seller.  Putting $3000-$5000 down speaks a little louder.  (Keep in mind this good faith deposit, your escrow, will be applied to your down payment and closing costs.  It is all going towards your cost to purchase anyway.)

Strongest offers also include things like reasonable closing times.  If the house is vacant, the seller will likely want to close as soon as possible.  If it is a short sale, you have a better chance of the offer being accepted if you agree to wait for short sale approval for an extended period of time, say 100-120 days instead of the customary 60-90.  If the house is occupied and it is a traditional sale, try to find out how much time the seller would like to close.  If you aren’t able but notice there is a lot of stuff in the house, giving 60 days to close 16019 arrowheadcould make the difference since the idea of packing up an entire household in 15-30 days could be a little nerve racking for a seller.  Not everyone likes the idea of a quick close.  Tailor your closing date accordingly.

Strongest offers also include few contingencies or short contingency time lines.  When writing an offer, the less you ask for, the more attractive your offer is.  Get inspections out of the way in 7-10 days.  Do not ask for a Home Warranty just because you can.  Do not ask for the seller to contribute to your closing costs if you don’t need the help.  If you do need the help, don’t ask for more than is necessary.   Keep it simple, keep it clean.

Another way for buyers needing financing to find success in today’s market is to seek out homes where owner-occupants have the first right to purchase.  Being able to cut a big chunk of the competition out of the game is definitely a plus.  Homes with First Look Initiatives and Neighborhood Stabilization Programs (NSP) give owner-occupants (not investors) the first right to purchase within a certain time frame – usually the first week or 2 the property is on the market.  Often times, these homes are in good shape and move in ready.  Granted there will likely still be competition; not nearly as much at there would be if investors were able to bid.

Lisa Jones Realtor at Keller Williams Sells HomesLastly, be prepared to pay a little more than market value.  I would never counsel a client to pay an outrageous amount over market value.  Sometimes the need arises to pay a couple/few thousand more than appraised value.  If you love the house and have the ability to do it, do it.  Often times paying a little more now is worth the time and expense of having to start all over again in the home search (including paying for home inspections and appraisal.)

Allow yourself some wiggle room as well.  If you are qualified up to $150,000, you may want to limit your search to properties up to $130,000 to start.  This could give you the cushion you need to have a little more offering power.

In conclusion, multiple offers can be challenging.  Patience is required.  Having the ability to act fast when the right home is found is crucial.   He who hesitates often times loses in this market.  Be ready to act.  Get qualified with a lender before you look at houses.  Know your budget, keep it in mind.  Do not stretch yourself beyond your limits but be prepared to stretch for the right house.

Forget Renting — It’s Cheaper to Buy, and you don’t have to have golden credit to do it.

ImageIt is still cheaper to own than rent in most of our markets right now.  According to Trulia, it is 51% cheaper to own than rent in the Orlando marketplace.  

Keep in mind, with an FHA mortgage buyers can purchase with as little as 3.5% down.  A 640 minimum credit score required…and folks that were foreclosed on may qualify to purchase FHA in as little as 2 years after the foreclosure date.

Sale prices are on the rise, and demand is steady….Although people can speculate and forecast all they want, there is no real knowing how long this will all last.  Been on the fence?  It truly is time to jump off and buy.  Like they say, get while the getting is good. 

 

 

 

Financial Reporting & Forecasting Firm Kiplinger says Housing Recovery is “firmly” Underway

The market sure is rebounding. We have seen steady and consistent growth in our Orlando marketplace for about 2 years now.  In the article, Kiplinger states “the turnaround will probably be slower in metro areas in Florida….”  I’m not quite sure the folks at Kiplinger hit the mark with that comment.  I first noticed the inventory beginning to dwindle in the Summer of 2011.  Since then prices have been increasing steadily and demand has grown exponentially.  Real estate is local.  In fact real estate is hyper local; so much so that improvement in values in the Orlando market varies from city to city – even neighborhood to neighborhood.  Because of this we have seen values improve at rates between 3-11% over last year (Again, depending on the area/marketplace.)

I do agree with the statement by Karen Mracek, a Kiplinger editor and real estate analyst, that “the rise in home values and decline in inventories won’t maintain their current pace.”  We are riding one of the waves of recovery (I am sure there will be several).  Sooner or later the currents will dwindle and we will find normalcy – which in our market is a growth rate of about 3% per year (pretty healthy.)

Read the full article here:

Kiplinger: Housing Recovery Firmly Underway

Selling Season in Florida.

Huffington Post posted an article about peak seasons for house hunters throughout the US.  Clermont, FL on a sunny day in JanuaryAccording to the article, buyers’ online search for homes in Florida peaks in January & February.  Makes sense since a lot of the country is tucked in their homes for the Winter and day dreaming of warmer climates.  Having lived in Rhode Island for 30 years, I remember the days well – sometimes even fondly. 

What I have found as a Realtor selling in the Orlando area is that the buying season in Florida never ends.  We do find more snowbirds (people who live in FL during the Fall & Winter and go back North for the Spring and Summer) purchasing in the Winter months, but ultimately the sales season in Florida never ends. 

Lake Minneola from Palisades Country Club in Clermont, FLThe climate and desire to relocate to the area assures us a steady selling season.  There is never a bad time to list in Florida.  Buyer traffic is steady and diverse.  Our markets include primary home owners, second home owners, investors – rental and flip, vacation homeowners, etc.  About 1/3 of all transactions are cash and we have a melting pot of domestic and foreign buyers; the bulk of which hailing from Canada, Brazil, the UK & China currently.