Hooray! Your home has officially sold and you’re about to receive a fat check for the exact price you put it on the market for…right? Unfortunately, sellers don’t typically pocket the price a buyer agrees to pay for their home. The closing costs that are factored in at the end of the transaction can really add up.
Check out the tips below to assist sellers in determining how much money will be left over once the transaction is complete.
Paying Your Agent
Typically, a real estate agents’ commission is 6% of the home’s selling price. Of that percentage, 3% will be given to the buyer’s agent and 3% will go to the seller’s agent—it’s a fair, 50-50 split. For example, if a house sold for $400,000, 6% of that would be $24,000 in commission with $12,000 going to each agent and then be split again with each agents’ broker.
Seller Closing Costs
In addition to paying the agent, closing is also the time for sellers to pay off the loan on their home. Your loan payoff may be a little higher than the balance on your loan due to prorated interest and you might owe a prepayment penalty for paying it off before the end of the term. If you have a home equity loan or line of credit, it will have to be paid in full at settlement as well.
Don’t forget about the attorney fees that can range from $1,000 to $1,500. These fees and the type of transaction should be discussed prior to hiring the attorney.
The state of New Jersey has a Realty Transfer Fee (RTF). This fee is based on the sale price of the home and is typically collected at closing by the title company to then be allocated throughout the counties in the state. The elderly, physically disabled and low to moderate-income households receive a discount on this fee.
It’s important for a seller to be prepared prior to settlement to pay or remediate for home inspection repairs ordered by the buyers. It is also a good idea to have a pre home inspection so you know in advance any problems that may arise and can address them before your home hits the market.
If both parties cannot come to a mutual agreement on any major issues, then both parties may opt to cancel the sales contract if a mutually agreeable remedy to fix cannot be reached. A seller should also be prepared prior to settlement to pay for home inspection repairs ordered by the Buyers.
Advice From The Professionals
RE/MAX Properties Unlimited Agent, Missy Iemmello recommends, “When listing your home for sale, consider purchasing a home warranty to offer prospective buyers. The low cost of the warranty, which is typically only paid at closing, can save you thousands of dollars during the home inspection repair negotiations. Also, if the seller is obtaining a certificate of occupancy they should submit an application with ample time to spare because some towns may limit the days they inspect a home and can be backed up, thus delaying closing which can sometimes be costly”. Randolph requires a Smoke Dectector & Carbon Monoxide Certificate of Occupancy which costs the seller $100 and is good for six months.