Seller Costs
By Jim Palmer Jr.

As a real estate professional, I have often been asked to provide a Market Analysis for potential sellers prior to their listing of a property. Along with that market-sales-analysis, I always provide an estimate of selling costs. This allows any potential seller to visualize what their actual net proceeds will be, assuming that the property sells in the value range that is indicated by the analysis.

Many brokers simply offer a percentage (usually 9- 10%) of the list price (or none at all) as to what the cost to the seller will be, without detailing those costs or talking about them. Since the equity in a property is possibly the single biggest asset that most people have, it makes sense to me that they would want to see how the actual costs break down in a more detailed format.

Based on the purchase price or projected sales price, a seller will be obligated to pay all or most of the following costs: State excise tax, Title Insurance, closing fee, Real Estate Brokers fee (listing agent portion and possibly buyer broker portion), pro-rated property tax, septic tank pump and certification, Well report (quality and quantity), recording fees, open space compensating taxes, and maybe even all or a part of the buyers closing costs. In many cases, the 9-10% estimate is close to the mark!   Closing costs on land sales could be a higher percentage depending on the broker’s compensation amount.

Once you know the approximate closing costs, and you know approximately what your mortgage balance is, you can then calculate what your approximate net proceeds should be. This information is often quite enlightening!  Remember that knowing the approximate loan balance is different than what the actual payoff amount might be, since there is often interest added to that pay off balance at closing.

A common lending practice in this region, (when there are so many VA and FHA borrowers), is for the buyer to ask the seller to pay all or part of their loan closing costs, which could be in the range of 3-4% of the purchase price. Many naïve sellers cringe at this thought, until they understand that a large percentage of all buyers are in that category.

Ask your real estate professional to provide a detailed written estimate of selling costs prior to listing your home! Don’t let an inexperienced or lazy broker keep you in the dark.