The DiCara R.E. Group at Sterling Homes
1487 Saratoga Rd
Ballston Spa NY 12020
Dave Cell: 518-588-8859
Tammy Cell: 518-588-8860
Once you have determined a fair market price for your home, you can calculate your bottom line. This is the amount that you will net (get a check for) after paying all of the expenses associated with selling a home.
Remember, by selling your home yourself, the only cost you avoid is the real estate agent’s commission. You will still have to pay all of the other closing costs, just like any other seller.
Closing costs vary from area to area and also depend on how each individual contract is structured. The following are items that you may need to deduct from your sales price to determine your net proceeds:
MORTGAGES OR LOANS - Any first, second, etc. loans, or mortgages. Also any liens that occurred if you used your home as collateral. Call or write your lender and ask for the amount to pay the loan in full (often not the same as the principal balance).
LOAN DISCOUNT POINTS - In many areas it is customary for the seller to pay points on the buyers loan. This is negotiable, except on certain government loans. One point is equal to one percent of the loan amount (not sales price). For example, if the sales price was $175,000, and the buyer put a 10% down payment of $17,500, the loan amount would be $157,500. One discount point would be $1,575, two points $3,150, etc.
PRORATED INTEREST - Mortgage interest is generally charged in arrears. This means that when you make your July payment, you are actually paying interest for June. So if your home sale closes on July 26th , you will still owe interest for 26 days even though you already made your payment on July 1st.
BUYERS CLOSING COSTS - Many buyers will ask the seller to pay part or all of their closing costs. On some government loans it is required by law that the seller pay them. These costs can include, but are not limited to: loan application fees, credit report, loan origination fee (usually 1% of the loan amount), loan discount points, title, escrow, and attorney’s fees, funding fees, tax service, mortgage insurance premiums, and impounds for taxes, insurance, and interest.
ATTORNEY FEES - Everyone loves lawyers!
ESCROW FEES - Escrow companies are disinterested third parties that hold funds, handle paperwork, and make sure that all necessary conditions are met before releasing money or transferring title.
TRANSFER TAXES/CHARGES - Transfer fees are often charged by state or local governments as a way to increase revenue. They vary widely, and are often based on a percentage of the sales price.
APPRAISAL FEES - If the buyer is obtaining new financing for the purchase, the lender will require a professional appraisal on the house. This is another negotiable item, but is often paid by the seller in some areas.
TERMITE INSPECTIONS - Required on some government loans, and requested by many buyers.
STRUCTURAL/GENERAL INSPECTIONS - Professional independent inspection services are required by law in some areas and often requested by buyers to make them more confident about the purchase.
TITLE INSURANCE FEES - Title insurance protects the buyer and lender against issues of improper ownership or transfer. The title insurance company will research the title to make sure there are no liens, judgements, or clouds on the title that would effect the ownership rights.
HOMEOWNER ASSOCIATION FEES - If the area has a HOA, chances are that there will be a fee to transfer from one owner to the next.
PREPAYMENT PENALTIES - Many private and some conventional loans have specific monetary penalties if the loan is paid off prior to a certain date.
RECONVEYANCE FEES - This fee may be charged by an attorney or escrow company to clear off the lien on the title when your existing loan is paid off at closing.
FAILURE TO NOTIFY PENALTIES - Some government lenders can charge one extra months interest if you fail to notify them at least 30 days in advance of your intent to pay off the loan.
ASSUMPTION FEES - Loans that are being assumed by the buyer often have an assumption fee charged by the lender.
HOME WARRANTY COVERAGE - Depending on the plan, a home warranty covers items in the house plumbing, electrical, appliances, etc.) for a period of usually one year.
For a list of specific charges, you can contact a title/escrow office, mortgage lender, or a real estate attorney. Of course, I would be happy to provide you with a net proceeds analysis at no cost or obligation.
After completing the first two steps in the process, it is entirely possible that you may decide not to sell after all. Perhaps the market values are not what you had thought, and you won’t be able to net enough money on the sale to be able to accomplish your next goal.
The important thing is to accept the realities of the market. If the timing isn’t right for you, it isn’t right!