Calculate Your Property Return After Fees
Are you selling a home? If so, use this calculator to figure your ultimate net proceeds from a sale after factoring in your closing costs. Enter your current mortgage balance, any loan pre-payment penalties, property taxes, transfer fees & Realtor commissions to quickly figure how much you'll have set aside after the transaction.
Current 30 YR Fixed Mortgage Rates
The following table highlights locally available current mortgage rates. By default 30-year purchase loans are displayed. Clicking on the refinance button switches loans to refinance. Other loan adjustment options including price, down payment, home location, credit score, term & ARM options are available for selection in the filters area at the top of the table.
Understanding Seller Closing Costs
Selling your home is certainly an exciting – albeit anxious – experience. There are many things to consider and lots of legal requirements to adhere to and understand fully.
A couple of the issues many sellers will try to get a handle on, regard the length of time to expect their property is for sale, and what specific closing costs to expect. This article will look at both ideas to provide more grounding for your own future decision-making.
How Long Will It Take to Sell?
The shortest answer to the question of how long it takes to sell a home, is about three weeks. Now this time frame carries with it a few assumptions and stipulations, which we will examine below in more detail.
The time it takes to sell a property is going to be largely dependent on the marketplace. If it is a hot buyers’ market, listings may be snapped-up in a week or less – a softer market might see the property take longer to find a new owner.
A buyers’ market allows home to sell for more with less effort on the seller, where a sellers’ market would encourage more strategic pricing and perhaps more attention to repairs and other potential “sweeteners” to the deal.
If your home is one of 6 for sale in your area, it may play differently than if your house is one among 20 others locally available.
Beyond market conditions (which you can’t control), there are three major factors that will affect your timing in a home sale: the price, the location and the overall condition of your home.
The Three Major Factors Impacting Home Sales Time
It helps to think of a seller’s perspective and consider what is important to them: proximity to schools, shops and businesses will all tend to figure prominently in evaluations. If your location is a highly trafficked or barely trafficked location, it could have an effect. Homes that can tick off more boxes on the prospective buyer’s wish lists, are the same homes more likely to sell quickly.
If your home is in a remote location, you may have challenges finding a buyer quickly. If you are not in the best school district, it could be another challenge. Objectively view your property as a buyer would.
The price is something you will have to be very careful assigning. Pricing a home too high may keep it from receiving real offers, and pricing too low may not earn you what you are aiming for.
If you are working with an agent, they will help you to strategically price your home competitively. They will listen to your goals and help you reach a fair price to meet them.
If you are using a DIY approach to home-selling you can start with an estimate, as like the one Zillow offers and then look at your local sales patterns. A comparative market analysis (CMA) is a service you can often buy from a local agent, and it will help you to understand what similar properties in your immediate area listed for, and then sold for – as well as their time spent on-market.
Eventually, you will likely be getting a professional appraisal on the property – doing so earlier may help you to set the right competitive price.
If you are doing pricing and competitive research yourself, you want to focus on the following attributes of local property sales:
- Stay with listings from the last 3-6 months (the more recent, the better)
- Look at homes sold within 1 mile of your own – a half mile or smaller radius is always better
- Ensure any home you compare to is within 10 years of your own being built
- Ensure any home you compare to has about the same square footage as yours, give or take 10%
There is an aspect of seasonality to home buying as well: Spring is simply the best time to list and sell your home. Fall would be second best, and you can see that this kind of loosely follows a school schedule – families are prone to make moves to accommodate the needs of their children.
Be aware that it is common to change your price at least once or have to offer other concessions to close your deal. Zillow offered a 2017 report that disclosed the most common things sellers will adjust to make a sale so understanding what can bend and not break, can help you to reach the finish line.
The condition of your home, assuming it has a good location and fair price, is going to sway a lot of buyers one way or the other. By again putting yourself in the shoes of the buyer, you can use some common sense to know what you MUST handle, while also having some bargaining power.
For instance, if your home needs a new roof, you are going to want to do that BEFORE you start showing it. While a roof needing repairs or replacement may not keep active buyers away, a new roof will tend to attract otherwise hesitant bidders.
You want the interior and the exterior to be in sales-ready shape, so that includes repairs, painting and cleaning. It is suggested to move out most of your furniture to show off the space and potential.
Other major items, like a water heater or an AC unit, can become bargaining chips to help sway a waffling buyer. If they could use an upgrade, it may be something easy to offer an otherwise hesitant buyer and get them to sign.
Ultimately, while you can’t control the market you CAN control the sales-ready condition of your house.
3 Weeks to Sell
So, to hit the “normal” turn of about three weeks (in 2017, according to CNN), your home should be:
- Competitively priced
- Attractive to buyers in both location and condition
- Listed in the Spring or Fall (or taking advantage of a hot sales pattern)
- Actively marketed
As your own home deviates more from this simple list, the more challenges you will likely face and also increase the length of time it is listed for sale.
Typical Expenses Associated With a Home Sale
Once you have found a buyer, you need to understand what your obligations are regarding closing costs. While buyers will also shoulder some closing costs, the brunt of these are going to fall on the home seller.
Most often, the costs of closing will come off the top of the money received for the sale – so the buyer does not have to come up with the outlaid cash. However, if there is a lack of earned equity, the seller may have to pay some fees out-of-pocket.
The following lists common seller closing costs to anticipate:
- Loan payoff – a seller will have to pay off any existing loans and/or liens on the property, an act that may or may not have associated fees (or penalties) applied. Some lenders will penalize an early payout. Be aware that prorated interest may make your loan payoff more than your current balance.
- Agent fees – this is perhaps the largest chunk for sellers to bite off; agent fees typically run about 6% of the sale and will go to agents on both sides of the sale. Though these fees are somewhat negotiable, they are going to remain the responsibility of the seller most often.
- Transfer taxes/recording fees – local governmental and sometimes state fees associated with the transfer of the property’s title. It varies by state, and you can find out what your state specifically does here: http://www.ncsl.org/research/fiscal-policy/real-estate-transfer-taxes.aspx
- Attorney fees – while each side of the sale may have their own legal representative, it is more common to have a single attorney. The responsibility of the attorney may fall to either the buyer or seller and may be regionally impacted by norms in the area.
- Title insurance fees – title insurance protects from events that might challenge the idea of property ownership. This is a cost typically absorbed by the seller for the buyer.
- HOA dues and fees – if you have a homeowner’s association, you will have to bring all dues up to present. Additionally, some HOA groups will charge a flat fee to bring in the new owner, so check with your association to know what to expect.
- Prorated property taxes – calculated from January 1 through whichever day you sell the property.
In some scenarios, the buyer and seller will negotiate and add (or potentially subtract) additional closing requirements that will definitely carry a price tag. Repairs are common, like plumbing or lighting fixtures – as might be replacing or cleaning worn carpeting or other necessary household accoutrements.
Negotiations may also swing some of these fees and costs to either the buyer or the seller – each deal will be unique to its own circumstances and the individuals driving it.
In general, the best strategy for a home seller is to take a note from the old Boy Scouts motto: be prepared. Know what the standard fees and costs are in your area – it will vary by location. Understand what your own responsibilities will be to an HOA, as well as to the buyer of your property.
Look objectively at the condition of your house and lot and make it as sales-friendly as you can. Contact professionals and agents in your area to get more specific, and localized advice – be willing to hire them, when needed.
The important thing to remember, is if you are selling your home for $300,000 and still owe $150,000, you will not make a clear $150,000 from the sale. You are going to have to use some of your earnings to cover the closing costs and other fees itemized above, which can adjust your profits significantly. By knowing what to expect and planning ahead, you can certainly make the most of your home’s sale and earn all you can from it.