With the Spring market on the horizon, there is bound to be a wave of homeowners ready to up size or down size, and list their homes for sale. The biggest question sellers will have is how much they will net in their sale after all fees are paid out. So let’s get right down to it and break down seller closing costs.
Seller closing costs are comprised of the following:
Realtor fees – 5-6% of the sale price
Attorney fee – $1200-1600 flat fee
Property condition waiver (if not filling out Property Condition affidavit) – $500
If there is a mortgage, there will also be title fees and satisfaction of mortgage filing – $350-500
So roughly $2500-3000 of these fees is to cover ancillary, non-realtor expenses and will remain static independent of the sale price. Realtor fees are obviously the biggest chunk of the pie.
If there is a mortgage in place, the remaining balance will be deducted from the net proceeds after all other fees are paid.
What I normally do when meeting with sellers to sign listing agreements is pop open my laptop, where I have saved an excel spreadsheet entitled “Seller Net Proceeds,” that helps me calculate and illustrate what they can expect to pay out in closing costs. Below is a screenshot of my spreadsheet for a property listed at $500k with an outstanding existing mortgage of $300k to be paid off.
This, in a nutshell, is how you determine seller net proceeds.
I suppose the next question you have is “why should I pay a professional THAT much money to market my home? Can’t I do it myself?” Well, yes and no. This next section is a side note, but a very important one! While you can certainly list and successfully sell a FSBO (For Sale By Owner), it’s statistically unlikely that you will yield as much profit as you would if the property was professionally marketed. It will also take considerably longer…and time on market = dollars out of your pocket. A real estate broker will provide you with expert staging tips and assistance to maximize your home’s showing potential, high quality photos highlighting the most marketable aspects of the home and playing up its best attributes – and a professional will likely know better than you, based on experience, which of your home’s features best appeals to the masses (it’s not the hand-crafted cat door you installed with 1800’s Canadian carved oak trim) ; can provide unrestricted showing access via lockbox, and ensure that every showing is accompanied by licensed real estate salespeople at all times; can provide a showing reception/concierge service to ensure no calls go unanswered and all showing requests are promptly booked, and can provide a level of marketing that you may not be able to secure due to time and cost constraints. Furthermore, a good agent can help you price appropriately right out of the gate, and provide guidance and pricing strategies to capture as many buyers as possible, thereby saving you considerable time (and therefore money) on market.
It’s nearly impossible to resist the temptation to overprice your home when selling by yourself. It’s hard to detach yourself from your home, which is always going to be more valuable to you than it is to anyone else. But there is no market value in sentimentality, unfortunately, and you’re not going to get more for your home than the comparable home down the street just because it’s yours. It’s equally hard to negotiate for yourself when emotions are involved. I’ve found that emotional tension is at its height for people selling their homes, and most sellers I know have to be talked down from the ledge several times throughout a transaction, prevented from making potentially catastrophic decisions with dire financial consequences that will cause deals to blow up, and can cost them tens of thousands of dollars. Acting as your own realtor is like a bride trying to plan her own wedding, or a pregnant woman acting as her own doula. Anyone that’s ever stumbled upon an episode of Bridezilla is already apprised of the perils of DIY planning (cut to wedding night – camera pans right to bride rocking back and forth in the corner of the dance floor in hysteric, convulsive fits, plotting the florist’s demise). An experienced, quality agent not only has the ability to expertly negotiate for you, they are detached from the process, able to remain objective and will not allow their emotions to cloud their judgement. They have a fiduciary obligation to serve your needs above all others, and are focused on delivering the best possible results and yielding the highest possible profit for you.
There is a reason that selling your home comes with a price tag, but it’s more than worth it. And what you will lose in seller net proceeds, you will gain in sale price, because you will likely sell for a considerable amount more with a real estate broker than you would on your own.