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.

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Florida Real Estate Sales – Contract to Close. I think we’ve got it right.

Real estate sales are different from state to state. Procedures are different, how and when we go under contract is different and who closes the sale differs. I am licensed to sell real estate in Florida. I have never sold anywhere else. Based on stories I have heard, observations I have made and experiences REALTORS from other states have shared with me, I believe Florida has gotten it right when it comes to contract to close procedures.

I have contacts with REALTORS across the country. For the sake of brevity, I am going to discuss Massachusetts and New York in comparison to Florida. It is my understanding that these 2 sales handle real estate transactions similarly.

In Florida, title companies are typically used to close/complete the sale. The title company is a neutral party in the sale. They perform lien searches to ensure there are no liens against the property that a buyer may be held responsible for, make sure the chain of title is clean (no one has claim to the property), order payoffs, prepare and record the deed, etc. They basically close out the sale. In Massachusetts and NY, attorneys handle closings. Attorneys also handle contracts.

In Florida, REALTORS handle contracts. In most instances, contracts that have been contractdrafted and approved by The Florida Bar. The steps of a sale in Florida are pretty straight forward. Buyer finds a house they like, they make a written offer on a contract and buyer and seller agree to terms. The terms are spelled out on the contract. Terms include sale price, closing date, escrow deposit and how it is handled in case of buyer or seller default, inspection periods, financing contingencies (including financing type and loan commitment deadlines), repair limits, etc. It is all spelled out and agreed to in writing by all parties prior to moving forward with inspections, appraisals and loan approval. Once the contract is executed by the buyer and sellers, inspections, appraisal, and all steps that lead to closing are completed.

In Massachusetts and New York, buyers and sellers come to a written agreement on price, inspections are performed, then an attorney drafts the contract to purchase. As an agent that works in residential sales in handshakeFlorida and has only worked in Florida, I find this mind blowing.

Here’s why: I have heard stories of buyers and sellers coming to agreed upon purchase price and finding other terms in the contract that both parties haven’t agreed upon. One example of this includes a change in buyer financing (i.e. going from 5% down on conventional financing to 0% down on a USDA loan). For a seller, this could be alarming. The seller agreed to a purchase price based on one set of terms and is presented a different set of terms at the time of entering into contract. Terms that could appear less appealing or “safe” than what was anticipated. Another example I have heard is buyer and seller agreeing to a contract price and when the contract is presented, buyer sees a clause stating they would lose their entire escrow deposit if financing was not in place within 20 days of contract. (most lenders need 30-45). I’m sure most times these items can get ironed out. Sometimes they don’t though. Sometimes weeks can be lost “renegotiating” terms that, in Florida, would have been ironed out up front – before a buyer invests time and energy on the house and more importantly spends hundreds of dollars on inspections.

I am grateful to be able to sell real estate in Florida. It seems to me it is more cut and dry, straightforward, and certain when a buyer and seller have a binding contract with all the terms to the agreement spelled out prior to any actions being taken. I can only think it cuts stress levels, too. If I were selling real estate in MA or NY I may think differently.  As a Florida Realtor, I would be extremely hesitant to allow a buyer to spend monies on inspections prior to being in a fully executed contract. I understand an agreement has been made by the parties in NY and MA, but without having all the terms to the contract laid out and agreed to beforehand seems like a risky endeavor to both parties in the transaction.

I’d be interested to hear from other REALTORS about contract to close procedures in your state, and what I’ve gotten right and what I may have gotten wrong about sales in MA and NY based on the information and examples provided to me by other in the field.

When it comes to staging a scent for an Open House, Keep it Simple.

I showed a house the other day that had candles burning in every room.  I thought it was a bit much…..guess I’m not the only one.

Here’s a link to an article in Wall Street Journal that discusses using scent to sell.

http://online.wsj.com/article/SB10001424127887323696404578298513849141412.html