What’s There to Know about Fees When Selling A Home?
Believe it or not, there are fees involved when selling a home that most seller’s do not expect when preparing to sell. Here’s a list of fees and costs you’ll need to be mindful of when planning for a sale:
Escrow companies are organizations that provide the service of ensuring proper handling of the payment and deposit as It goes from buyer to seller. They ensure that the money arrives in the correct place at the correct stage in the process. The escrow officer will also properly manage all relevant sale documents, and take care of title transfers. This service usually costs roughly 2% of the sale price, but can vary based on how well you negotiate. Not only should you negotiate percentage, but also discuss splitting the fees between the you and the buyer.
Most commonly the selling of property is accompanied by a transfer tax, which is typically assessed to the sale itself and not the individual. Depending on the state you’re selling in, the transfer tax fees can range from less than 0.5% – 2%; however, it is wise to try and negotiate this fee with the buyer as well. Additionally, some states have capital gains tax that are imposed on the profit made from selling the home. Capital gains taxes typically only apply to higher priced homes (Exclusions of $500,000 for a married couple and $250,00 for a single individual who’ve lived in the home for a minimum of 1 year) as the profits tend to be greater. Remember this fee is only imposed on the profit amount, not the actual sale price of the home.
While the cost of the title transfer is included in the escrow fees, there are some additional title-related fees associated with selling property. A title search fee is the cost for the formal checking of public records to ensure and record that the buyer is the legal owner of the home, the amount of this fee is state specific, and is dependent upon ease of records access. The title insurance fee is a onetime fee assessed to the buyer (unless the buyer has negotiated the coverage of this fee with the seller), that covers any legal issues that may arise from conducting the title search. This fee doesn’t usually exceed 1% of the listing price.
Other possible miscellaneous fees:
Home Owners Association Fees – May be assessed to cover the transfer of HOA membership from seller to buyer.
Repairs – Your home may need renovations before being placed on the market.