Many people aren’t aware that the seller of a home has certain costs they are responsible for. Before you go into a sale, it’s helpful to know what these costs are so you can see if you’re financially able to handle them. These costs will vary from state to state, but there are a few general costs you can count on.
Taxes, Fees, and Insurance
In any sale, cash or traditional, there are some costs that you will always have to pay. First, there are several taxes involved including the transfer tax. You also will need to keep up with your property taxes until the sale is completed. Since there are others involved in the sale, such as title and escrow companies, you will need to pay several fees to cover their services. Examples include escrow fees, attorney fees, closing fees, and even HOA fees. Lastly, you may be responsible for paying the title insurance.
No Realtor Commission
In a traditional home sale, both the buyer and seller are likely to use real estate agents to assist them. The seller is then responsible for paying the commission of both real estate agents. Typically, a real estate agent’s commission is about 6% of the sale price. This is a lot of money to pay at the end of the sale. Fortunately, you don’t need to worry about this in a cash sale. No realtors are involved in a cash sale and you won’t be paying any commissions. This makes your closing costs significantly less expensive.
In a cash sale, there is more flexibility in how the sale works out. For example, there are typically certain costs set aside for both the buyer and seller, but you can adjust who pays which. In some cases, you might offer to pay some of the closing costs for your buyer, or perhaps they’ll offer to pay some of yours. You can also incur additional costs if you haven’t already paid off your mortgage. This will lead to some additional fees.
For a traditional home sale, the seller can expect to pay 8-10% of the sale price in closing costs. A cash sale only results in about 3-6% of the sale price. The total cost of your closing costs will depend on your state and the individual circumstances of your home and the sale.
If you want fewer closing costs, you should sell to a cash buyer. Click here to get a fast offer from Joe Homebuyer.