Many homeowners spend money to spruce up their house before they put it on the real estate market. They may naively think that they are done spending money on this house; however, this is not always the case. Talk with your real estate agent or your real estate attorney about the other costs that may come your way.
Real Estate Agent Fees
As the seller, you are responsible for paying your real estate agent as well as the buyer's real estate agent. Currently these fees are about 6% to 7% of the sale price of the home. You can negotiate this with the agency. Find out exactly what you are getting with your contract. You may even be able to negotiate down to 5%.
There are a few fees that the seller is automatically responsible for. There may be penalties with your bank for an early loan payoff.
States and cities can also impose a transfer tax fee. This is a fee for transferring the title of the real estate from one person to another. It can be a flat fee, but most states have it as a percentage of the sale price. Your real estate agent will be able to tell you the cost for your state. These range from 0.1% to 1.3%.
Buyers generally always pay the cost for an appraisal of the property and for a home inspection. They accrue these costs after they have entered into an earnest agreement with the seller.
The appraisal is required from the buyer's mortgage lender before the contract can be solidified. As a seller, you should never offer to pay this fee because if the appraisal is not up to the lender's standards than the buyer will not be able to purchase the home. Their earnest contact specifically states that they can back out of the contract and receive their earnest money if the home does not appraise for a certain value.
The buyer should also always pay the home inspection fee. A home inspection is not legally required in most states. The results of the inspection can also give the buyer a way out of their contract. The bottom line is that as the seller, you should never pay for anything that may allow the buyer to back out.
Negotiable Buyer's Fees
The mortgage closing costs are commonly part of the contract negotiation. Without negotiation, the buyer is obligated to pay loan origination fees, title search fees, deed and mortgage preparation costs, recording and transfer fees. If it is a seller's market, you can refuse any offers that require you to put down money towards these fees.
However, if the market is favoring buyers, or you are motivated to sell quickly, you may need to agree to pay some of the costs. Don't blindly agree to pay all closing costs. Rather, offer either a specific dollar amount or a specific percentage of the sale price of the home.
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