Seller Closing Costs & Estimated Net Proceeds

How much are closing costs when selling a home? In this video, we discuss seller closing costs and how to calculate estimated net proceeds.

Hey i’m zach mcdonald your real estate agent with real property associates and in today’s video we are going to talk about seller closing costs and estimated net proceeds sellers often ask me what does it cost to sell my home and this question comes more often from somebody who has never sold a home before or it’s been a really long time and in this video i want

To talk a little bit about the cost to sell your home and those costs are called closing costs the first closing costs you’re gonna have as a seller is real estate agent commission’s these commissions are going to be negotiated with your agent before listing the home now typically these commission’s are going to be somewhere between five and six percent of the

Purchase price depending on the agent you’re working with and other factors now the way the commission’s are broken down at least in washington state is you’ll agree to pay the listing firm a commission and then they will share a portion of that with the buyer’s agents firm so typically if it’s a 6% commission 3% traditionally is going to be shared with the buyer’s

Agent firm the agent that brought the buyer settlement costs are gonna be the second cost you will have as a seller the first part of those settlement costs are going to be your escrow fee and this fee is gonna pay the escrow company who is going to be in charge of the money and the contract and the signing part of the transaction on the back end and this fee is

Gonna be split 50/50 typically between buyer and seller and then you’ll have the title insurance policy which is going to be again a split fee typically between buyer and seller the buyers gonna pay for the lenders policy and then you will end up paying for the buyer seidel insurance policy and then you’re also going to have prorated property taxes these are gonna

Be any taxes for the period of time that you have owned the home that you haven’t paid those property taxes for so for example if you lived in the home from you know january until march and then you sold it you’re going to be responsible for a portion of those taxes in that six month period even if you are planning to be moving out of the house before the next

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Property tax payments due you will be responsible for the taxes in the portion of that period that you lived in the home the last settlement cost that you’ll have as the seller is going to be the excise tax and this tax is a tax on the sale of your property and it’s going to be based on the sale price i recently did a video on the changes to the excise tax rules

In washington and i’ll link up that video down below i think you’ll find it helpful if you want to get really educated and really far into the weeds how that all works but just know that you’ll have an additional tax on the sale of the property as part of your settlement costs the third closing cost you’re gonna have as a seller is your mortgage payoff so most

People are going to have at least one mortgage that needs to be paid off at closing if you don’t congratulations that’s really awesome and you’re gonna get to take home a lot more of the sales proceeds but if you’re like most people you’re going to have at least one mortgage the escrow company will facilitate the pay off of your loan prior to closing now if you

Have other loans on the property maybe you have a second mortgage or you have some kind of a home equity line of credit a heloc those will also need to be paid off prior to closing additionally sometimes there are other payoffs that are needed and the most common would be something like a contractor lien so i encountered this not too long ago with a client where

The owner of the home had not paid for work that was done and so that company had put a lien on the property which is essentially a claim of ownership saying hey when this property sells this debt needs to get paid off and part of the title process is the title company and researching that and then finding those different payoffs that need to get paid and so that

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Company had to be paid before we could close on the sale buyer paid closing costs are gonna be the fourth cost you might have as a seller now in washington state it’s not super common especially in the real-estate market to have sellers paying buyers closing costs if the markets less competitive or it’s a tough property to sell and the buyer really needs the help

Sometimes there are reasons that the closing costs are worked into the sales price and there are different ways that can happen and different reasons that might happen if you’re interested in learning more about that i have another video linked up down in the description where i go into a lot greater detail on how to negotiate those closing costs into a sale might

Be interesting if you’re a seller and you’re watching this video to see kind of what a buyer might be thinking as well the fifth and final set of closing costs or we’ll call it a bucket of closing costs is going to be just a jump to work a miscellaneous bunch of different costs that all add up a little bit you’re going to have if you own a condo you’ll have hoa

Dues that might need to get paid off you may have a special assessment that’s been levied and you might it might or might not have agreed to pay all or a portion of that off prior to closing you also have some document prep fees and some recording fees those are pretty minor those other two that we just talked about are gonna be usually bigger and then if you

Were offered a home warranty to the buyer that might also be one of the costs but overall the big focus on this section is going to be you know do you have a condo that has a special assessment or homeowner dues oh really quick there’s one other that i forgot the other cost that you might not think of is any prep work that you did prior to selling your house so

When you’re going through this list you’ve got all these closing costs but then you also have the cost that you put into the house prior to selling and to get it ready for market so that would also be a cost that you’ve already paid but would come out of your final proceeds in the end now the real reason that people ask about seller closing costs and are curious

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About seller closing costs because they want to know how much money they’re gonna walk away with so the first part of that is going to come down to what’s the sales price of the home and then you’re going to deduct those closing costs the equation and that’s gonna give you your final net proceeds now as a real estate professional one of the things i provide for

Clients is a market analysis and that’s where we look at comparable sales we study the market i do market update so i’m always studying the market but we take into a consideration recent sales that are similar to the home the market conditions and then we come up with that estimated value and discuss the different strategies for that list price now ultimately the

Sales price comes down to what do a buyer and a seller one to agree on so your house is ultimately worth what somebody wants to pay for it and you’ll agree – so that ends up meaning that sales price you deduct these closing costs from that equation and then you come up with the net proceeds and so i also will prepare an estimated net proceeds worksheet prior to

Listing the house so we’ll do that market analysis first and then we will base our estimated net proceeds off of our target list price and maybe even a couple other potential sales prices so that you can see what you will potentially be walking away with because as we know that’s the primary concern what am i going to walk away with i hope you found this video on

Seller closing costs and estimated net proceeds helpful for you and if you would please do me the favor and give this video a thumbs up and if you know somebody that could benefit from this information please consider sharing with them bye for now

Transcribed from video
Seller Closing Costs & Estimated Net Proceeds By Zach McDonald