7 Steps to a Successful Property Sale
In the three previous steps of 7 Steps to a Successful Property Sale, we talked about current market conditions, assessing the value of the home and setting the right price. Step 4 – Calculate the Bottom Line – determines the financial feasibility of selling your home in the current market.
- understand current market conditions
- assess the current value of your home
- set the right price
- calculate the bottom line
- prepare the home for sale
- create an advertising and marketing strategy
- review contracts and common sales practices for your marketplace
Understanding the costs of the sale of your home at the beginning of the sale process will save a lot of anguish. Determining how much money you will net is the key factor in the decision to sell or not to sell.
A seller’s estimated net sheet helps establish what you will be looking at paying at the closing table. By gathering some of the following information you will be able to complete a net sheet with your agent: the first and second mortgage payoff, the annual property taxes and sewer lateral line costs(on the property tax bill), the sewer bill, and home owner association dues. In the state of Missouri closing costs to the seller are surprisingly small.
Listed here are typical items to calculate into your bottom line:
- Home sale price—using various sources to determine a reasonable estimate of how much your home is worth. Using current sale prices of similar homes in your area along with past sales and market values.
- Outstanding mortgage–the amount of money that you still owe on your home is subtracted from the estimated home sale price. This provides a general idea of your home sale proceeds, excluding fees and taxes associated with selling a house. Make sure to enter your most current outstanding mortgage balance.
- Real estate agent commission–the fee charged by both your real estate agent and the buyer’s agent. In most home sales, this will be split between the two agents. The commission is determined by taking the percentage and multiplying by the estimated home sale price.
- Staging and preparation costs-in some instances, it is necessary to stage a house before you sell. These expenses should be factored in along with any other costs (e.g., landscaping, cleaning, etc.) related to the preparation of selling your home.
- Seller concessions-these costs are more commonly known as “closing costs” and may involve the seller picking up some or all of the buyer’s closing costs as an incentive that makes the property more attractive to the buyer. Closing costs may include loan processing fees, attorney fees, transfer taxes, title insurance costs, inspection fees and more. As the seller, these expenses would be deducted from your net proceeds of the home sale.
- Transfer taxes and other settlement fees – Settlement agent fees covers the office handling the exchange of money and documents – usually by the title company. ($250 -$350)
- Other miscellaneous fees may be added to your transaction. i.e:
- Payoff and delivery fees
- Sewer due
- City taxes
- Sewer lateral insurance
- Termite inspection
- Municipal Inspection
- Home Warranty
Click here to calculate your bottom line.
The seller net sheets have some standard charges plugged in but most of the costs are specific to your property. Things to remember are that a mortgage is paid in arrears so the interest for the preceding month will be added to the payoff. Taxes in Missouri are paid in arrears so the seller will be responsible for the prorated taxes up to the day of closing. (If taxes are escrowed in the mortgage payment, there will be a refund from the lender within 30 days after closing.)
It is a very common practice in the current market for buyers to ask the seller to pay closing costs. Asking a seller to pay closing costs nets the seller that much less money at closing. For example, if you are bidding on a house that costs $200,000 and ask for 6% in closing costs you are basically offering the seller $188000 ($200000 less 6%). When you are in a seller’s market it is sometimes necessary to offer more than the asking price. The value to the buyer is bringing less cash to closing. The closing cost credit varies from 3% to 6% of the sale price. It is something that should be factored in before listing the property. Also factor in a cushion for buyer requests for repairs. At this point, if it’s still a green light to sell then let’s go to the next step in 7 Steps to a Successful Property Sale – Step 5: Prepare the House to Sell.
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