Question:
“Hi Gary, besides the Realtor fee, what is the cost to sell a home here? What’s deducted at closing, etc.?”
Answer:
There are several categories of items that you should be aware of:
1. Standard Seller CLOSING COSTS
a) These are title insurance, escrow fee, county transfer tax, and other fees. They typically total .75% to 1% of the sales price.
2. Costs of OWNING
a) Prorated Interest – Your loan payment is paid “in arrears” (your June 1 payment pays for May), so you’ll likely have to pay some accrued interest on your loan(s) at closing.
b) Prorated Property Taxes – You may have a credit or debit of several months of property taxes, depending on when you sell.
3. REPAIR Costs
a) Misc Repairs – Nowadays, buyers have home inspections and ask for repairs. It’s part of the process and you should expect that you’ll have to pay for some. Expensive fixes are foundation or roof problems.
b) Pest Control (Termite) – Not legally required, but most buyers expect a full clearance. Get a report early and avoid surprises.
4. TAX Costs & Withholding
a) Income Tax – Lived in and owned the house for at least 2 of the past 5 years? You’re most likely exempt. If not, talk with me AND see your tax professional.
b) FIRPTA & Cal-FIRPTA – U.S. and CA taxpayers are exempt. Otherwise, the feds or state may withhold funds from your sale.
5. MISCELLANEOUS
a) Prepayment penalty – You probably don’t have one. But double check your loan papers to be sure. Find your “Note” or “Trust Deed Note.” FYI: It MUST say the word NOTE or you are not looking at the right document!
b) Liens & Judgments – Forgotten or erroneous items can crop up and must be paid or dealt with.
c) Closing Delays – This could cost you added interest, taxes, insurance, & maintenance.
