What Is Your Cost To Sell?
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 the 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 Realtors® simply offer a percentage (usually 9- 10%) of the list price as what the cost to the seller will be, without detailing those costs or talking about them. Since the equity in any seller’s property is possibly the single largest asset that they have, it makes sense that they would want to see how the actual costs break down in a detailed format.

Based on the purchase price or projected sales price, a seller will be obligated to pay the following costs: State excise tax, title insurance, closers fee, Brokers commission, 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 most cases, the 9-10% estimate could be close to the mark! Closing costs on land sales could be higher because of higher commissions depending on the level of difficulty.

If you know approximately what your mortgage balance is, you can then calculate what your approximate net proceeds should be. This information is usually very 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 payoff balance at closing.

It is very common in this market when there are so many VA and FHA borrowers, for the buyer to ask the seller to pay all or part of the costs incurred to secure their loan. Usually this is accomplished by offering full price, then crediting the loan costs paid by seller– (approx. 3-4% of the purchase price). This would be the same as offering a lower price, since the net result is the same to the seller. Many naïve sellers cringe at this thought, until they understand that it may be necessary in order to get their house sold.

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

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