There are a variety of costs involved with selling your home on the market. Take a deeper look at those costs and how you can avoid them.
If you’ve ever tried to sell your home before or have sold a home before, you know that it’s not exactly easy to do it the traditional way and it certainly isn’t without cost. The closing costs for home sellers can vary widely depending on a number of factors and it helps to know what you’re getting into when selling a home and what your options are to save money and get out of your home with as little out of pocket expense as possible, especially if you’re just trying to sell as quickly as possible.
The first thing to know is that selling your home on the traditional market isn’t the only way to go; you have options. We’ll give you a break down of what the closing costs for selling a home can be and how you can sell your home without having to spend so much money or even any money at all if you choose the right option.
Before we get into that, we’re going to cover some of the issues that come up when trying to sell your home the traditional way.
Common Costs and Problem Home Sellers Face
Closing costs are a big part of the trouble with selling your home, but if that weren’t enough to consider looking at other options for selling your home, there are some other common issues that home sellers face that you may not be aware of.
Here are some of the things to consider when trying to sell your home.
Selling Takes Time
One of the biggest downfalls of selling your home on the open market is the fact that, even if you hire a real estate agent and find a buyer, you may still wind up waiting months on your closing date and the sale to finalize.
The reason this can be a problem is that the longer your home takes to sell while on the market, the more costs that are incurred. You’ll have to continue to pay property taxes and keep up with homeowners insurance while you still retain ownership of your home. A standard real estate transaction can take months even if it goes quickly.
Other factors like trying to transfer ownership, cancelling your owner’s title insurance policy so that it can be switched over to the buyer, dealing with the title company, and handling any outstanding liens can all slow down the sale process.
Seller Costs Add Up
As we’ve discussed, the home selling process can be slow and over time, all the costs associated with owning your home continue to accrue. You’ll still likely be paying mortgage payments, paying interest, paying for upkeep and maintenance, and you may even be paying a monthly fee to keep your house listed until it sells.
On top of having to pay the seller’s closing costs, these extra expenses can make it very difficult to sell your home and move on to the next steps in your life.
The Market Affects Home Sale Price
While it is possible to sell your home for a higher purchase price than asking, this is contingent on a number of different variables and most of them are out of your control. In particular, if it is a buyer’s market, you may struggle to get what you want out of your home and may still end up waiting months on closing day.
If you’re in need of a certain amount of money out of your home, then the combination of the wait along with what sellers pay as part of the closing process can leave you coming up short on your goals.
Selling Means a Lot of Work
Another thing that many home sellers don’t like is the sheer volume of paperwork and logistics that it takes to sell a home. Even with a real estate agent helping, things can quickly become complicated when factoring in seller concessions, trying to keep things fair for both sides while you try as the seller not to have to come out with so much cash out of pocket.
We all know calculate closing costs isn’t easy, but even with the most common closing costs factored in, there’s still a lot of paperwork and issues to handle before the sale can go through. Real estate closings require a lot of knowledge and support. Figuring out things like government transfer tax, escrow fees, dealing with the buyer’s agent and making sure the home inspection meets all guidelines are all part of the process.
How Closing Costs Work
It is difficult off hand to determine what the closing costs will be on a home sale and it is important to understand that buyer’s closing costs are not the same as when sellers pay closing costs. Each party in the sale will have to deal with closing fees, but the amount and the total cost associated will differ based on several factors. We’ll go over how this works for both the buyer and the seller, so that you can understand how much closing costs are actually going to end up costing you in the end.
Buyer’s Closing Costs
We want to talk a bit about buyer’s closing costs first as a comparison to what you can expect to pay as a seller. Average closing costs can vary greatly for a buyer, depending on the real estate agent commissions, the brokerage fees and other charges, as well as the value of the home. Closing fees for a buyer range between 2% and 5% of the home loan amount.
This calculation is contrary to what many people assume. The closing fees for a buyer are not based on the total cost of the home, but instead on the amount of money borrowed to purchase the home. For instance, say a person attempts to buy a home for the purchasing price of $300,000, they put $30,000 as a down payment and finance the remaining $270,000. The closing cost for the buyer would be on the remaining $270,000, not the initial purchasing price.
As we talked about, there are other factors, such as a seller concession, whereby the seller pays a portion of the buyer’s closing costs or pays other fees associated with the purchase of the property in order to make the sale. In this way, the buyer’s closing costs can go up or down depending on what the seller is willing to do in negotiations.
Each party will likely have a real estate agent working for them and there are things like property taxes, transfer taxes, a transfer fee, escrow fees, loan origination fees, and other charges that may come up. The buyer’s agent typically works for them and the seller’s agent works to get the seller as much money as possible.
Seller’s Closing Costs
The seller closing cost can be a great deal different and more complicated than for a buyer, which can lead to a lot more money out of pocket for the seller once the deal is finalized. Whereas the buyer pays a fee that is not directly associated with the home’s purchase price, the home’s sale price is what determines how much the seller pays.
This makes a huge difference in how much a seller pays in closing costs because the entire value of the home is how the basic costs are calculated. Additionally, typical seller closing costs range between 6% and 10% of the sale price. This makes typical closing costs for sellers much higher than for a buyer. Seller closing costs can get quite hefty even without other fees that a seller typically pays. Each party pays closing costs in some manner with the final agreement dictating just how much each party is responsible for. Specific closing costs are difficult to calculate, but you can find an online seller closing costs calculator to help get a rough idea to figure out what you can expect to pay.
Much of what the seller pays in terms of closing cost can be broken down to agency fees, recording fees, taxes, repairs and upkeep, and any other associated costs with keeping the property up to code. Prorated property taxes may even be included in this figure.
Other Things to Consider
It’s important to know that not every situation is the same and you may even have need of a real estate attorney depending on the legal status of your property. Things like delinquent property tax payments, not keeping insurance, health and safety violations can all affect whether your home even sells and how quickly.
A real estate attorney can typically help with things like transfer fees, what type of seller concession is equitable and who pays closing costs for what. However, even though this makes things a bitt easier, it still will mean more money in attorney fees and time to get things done. Unfortunately, you can’t increase the purchase price to offset the cost of attorney fees, title insurance, transfer fees and other costs.
Trying to consider whether or not you may need a real estate attorney before selling your home on the open market.
What Other Options Are Available?
With all the time and money it takes just to get to the closing table, you might be wondering if there aren’t any better options out there for you to sell your home without spending all that money and having all those headaches.
We’ll go over a couple of options you have and explain which one is the right one to sell your home and maximize profits.
Independent Home Sales
One way to sell your home and hopefully avoid a lot of the cost is by selling your home yourself. This way you’ll avoid brokerage fees and some of the seller closing costs, but you’ll still be paying mortgage payments and property taxes while your home sits waiting to sell.
If you were in a position to wait as long as needed to sell your home then this might be an ideal option where you don’t have to come out with a bunch of money, in fact your total closing costs will be very low by selling yourself but this is not the situation most home sellers are in.
Selling to a Home Buyer
While most folks might not think it is the right thing for them, selling to a certified home buyer like Keystone Home Buyers is an excellent choice to get out of your house with as much money as possible. Not only do they handle all the paperwork and make the selling process as simple and painless as possible.
Benefits of Selling to a Home Buyer
So, now you may be asking, “why should I sell to a home buying company?” Well, there are several benefits and reasons to consider a company like Keystone Home Buyers rather than trying to sell your home the traditional way.
No Closing Costs
Closing cost is one of the biggest downfalls of the traditional sale. By selling to a home buyer instead, you pay no closing costs whatsoever. This means that whatever offer you get for your home, that’s what you walk away with. You won’t have to worry about waiting on funds or dealing with an escrow company, in fact, you’ll never even talk to an escrow company because you’ll be paid up front for your home, many times in cash.
No Stacks of Paperwork
Another headache with selling a home is all the stacks of paperwork that have to be filled out when it’s time to sell. By selling to a company like Keystone Home Buyers, you eliminate most of the red tape in favor of a fair offer for your home. This not only saves time and effort, but makes it so that you can focus on more important things like where you’ll be moving to or what you’ll be spending that extra cash on.
No Legal Headaches
Besides less paperwork, you wont’ have to worry about hiring a real estate attorney and paying transfer fees and all those extra taxes. The home buyer will handle all the work for you and once the title is transferred over, you won’t have to worry about the home anymore or keeping up with maintenance and property taxes.
No Costly Repairs
One of the largest expenses of selling your home besides closing costs is dealing with making necessary upgrades and repairs to sell your home. These are not only incredibly expensive, but they can be very time consuming, meaning that much longer before you can close and finish selling your home. With Keystone Home Buyers, they buy your home as is. You won’t have to lift a finger and you’ll still get a fair price for your home no matter what kind of shape it’s in.
Fast Sale
No one wants to wait months with their house sitting on the market trying to sell, all the while trying to figure out what they are going to do next once it sells. In many cases, homeowners are not in a position to wait the time it takes for a house to sell.
Some of the most common reasons people sell their home are to move to a new location, because of employment opportunities, or because of inheriting a property they can’t afford to upkeep. In all of these cases, time is an important factor.
By selling to a home buyer the sale is quick and easy. You get to pick your own closing date so that you can sell as soon as you’re ready. This is a major benefit to anyone who simply wants out from under the burden of a mortgage loan or who doesn’t want to be responsible for the home any longer.
Virtually No Risk
The worst thing that can happen to a home seller is to make it all the way to the closing table only to have something go wrong or to have the buyer back out at the last minute. This can lead to a ton of wasted time and money and worse yet, you’re still stuck with your home after everything is done.
By selling to a company like Keystone Home Buyers, you don’t have to worry about the risk of a buyer not getting financed due to a poor credit score, backing out at the last minute or asking for one seller concession after another. Once you’re given an offer, all that’s left is to fill out the paperwork and transfer the title and you’re set. You can often get paid in cash for your home so you won’t have to wait to get paid for your home.
Final Thoughts
We hope this guide has given you all the information you need about what to expect to pay when selling your home and how to avoid paying all that money out of pocket by selling to a home buyer like Keystone Home Buyers.
If you’ve tried to sell your home before or simply don’t want to deal with all the expense, headaches, and hassle, consider your options and why not try selling to a home buying company that will get you paid a fair value for your home without all the paperwork, worry and cost of a traditional home sale.