Understanding and anticipating your selling costs, should not be overlooked!
Too often, many sellers forget to take into consideration the costs of selling, which can impact their ability to purchase their new home, if they will be using the proceeds of the sale to purchase. Learn below, why you need to consider your selling costs.
"An investment in knowledge
pays the best interest."
When selling your property, you will incur certain selling expenses, which should be taken into consideration, to avoid any last minute surprises. Perhaps, the largest expense will be the broker's commission, which is negotiable between you and the broker. The other selling expenses are also occasionally negotiable, between the seller and the buyer. You'll learn below, what you can negotiate with brokers and buyers, so you have a better broader understanding of your options and the pros and cons of each.
As a property seller, you have several selling options available to you when selling. You can sell the property on your own, hire a licensed real estate broker, or auctioning your property with a real estate auctioneer. Most property sellers, or roughly 90% use a listing broker and there are good reasons for that. It takes time, specialize training, knowledge, expertise of neighborhood sales trends and negotiating skills; which typically most properties sellers don't have. Brokers charge a fee for their services, which can be in relation to the selling price of the property or a flat fee.
Is 6% of the sales price the standard selling broker's fee?
No! There are no standard broker fees in the real estate industry. Anti-trust laws are clear on this. Fees vary from broker to broker and the level of services they provide. A discount broker for instance, may charge a 1% commission or a flat fee to place the property on the MLS system and provide a limited range of services. Other discount brokers fees can charge less than a full service broker, but their services will be fewer or limited. It's important to understand, that what you agree to pay your broker, will have an impact on the number of services the broker will provide, and his or her ability to incentivize other brokers or buyers, and perhaps extend the time the property takes to sell.
Our fees are very reasonable, as you will see, when compared to the amount of services we provide. We don't have a set fee, per se, because every seller's situation is different, which may require different levels of service. Our fees are very competitive. We will be happy to discuss and negotiate a commission agreement with you that is fair and most importantly, puts a premium on your success.
Your other selling costs are related to items either you or the buyer agree to pay, as part of the terms of the sales and purchase agreement. These will be depend on the type of sales and purchase agreement used in the sale. The As-Is sales and purchase agreement, which is typically used in most transactions, does not set aside any monies for repairs, if deficiencies are found during the buyer's inspection, unless specified in writing. The residential Contract for Sale and Purchase on the other hand, has provisions in which you as the seller can choose to set aside a dollar amount or a percentage of the sales price towards general repairs, the treatment and repair to damage caused by wood destroying organisms and costs associated to close open permits.
There are advantages and disadvantages related to the use of their one of these contracts when selling your home. We can review the differences, so you can decide which contract type to use in your sale.
What do sellers typically pay for in a transaction?
Again, the selling costs will depend on the type of contract used and what you can negotiate with the buyer. Typically, the seller pays for the documentary stamp taxes (if any), the estoppel letter, if the property is governed by a homeowner's association or condo association, the recording and other fees needed to cure the title, any attorney fees or title company fees you agree to pay, and /or on behalf of the buyer, as stipulated in the sales and purchase agreement.
You may also need to pay for the following, if its part of the terms agreed to with the buyer:
The municipal lien search.
The owner's policy and charges.
The owner's title policy premium.
We can sort it all out with you, so you can decide what you are willing to pay for, what is customarily paid by the seller and what you want the buyer to pay. On average a seller's total closing costs, including commission, is more or less, 8% of the sales price.
Who pays for the property taxes when a property is sold?
Property taxes are prorated from January 1st, to the day of closing and are typically paid by the seller, as a credit to the buyer. The closing agent will make the final calculation prior to closing, and the amount will appear in the seller's settlement statement, which shows line by line all your expenses.
What can I negotiate with the buyer to lower my selling cost?
You can negotiate just about any selling costs and pass them on to the buyer. However, its important to consider that buyers typically are working with a limited amount of resources, when purchasing. Asking the buyer to pay for part or all of your expenses during the negotiation stage, usually results in a failed negotiation. Only in extreme situations, where the seller was in deep financial trouble, and the buyer really wanted the property, have we seen the buyer pay for part or all of the seller's expenses.
We can advise during the negotiation stage, as to which costs you can ask the buyer to pay, without jeopardizing your sale.
"An investment in knowledge pays the best interest."
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