How much does it cost to sell a house?
How much does it cost to sell a house? This is a question we get a lot! Selling a home in Massachusetts does have some fixed costs, but many of them are variable based on the specific situation of the seller. Below is a breakdown on the expenses of selling a home.
Click here to get a copy of our Blank Seller Net Proceeds Sheet
Loan Payoff: The first expense to be calculated is the loan payoff and pay off any equity lines that a homeowner may have. This expense is a variable expense that changes with each homeowner. Some homeowners may not have a mortgage.
Real Estate Commissions: The Commission owed to Real Estate agents is broken down as two separate fees. Most people when selling their home consider them one, however this is incorrect as the fee is broken down with a portion going towards the Marketing Fee as well as the Co-Broker Fee. By law, the seller pays the total fee to the broker they have retained to represent them in the sale of the property who then in turns pays the other brokerage for their representation of the buyer.
The marketing fee is the portion of the commission that is paid to the seller’s broker. This fee compensates the brokerage representing the seller for their marketing expenses, negotiation expertise and time spent managing the transaction.
The Co-Broke fee is what is paid to the brokerage that is representing the buyer. This brokerage is being compensated for introducing the buyer to the property and managing the transaction.
It is against the law for a Real Estate Agent to say that the Standard Commission charged is X. It is also against the law for two agents to discuss commission structures charged to other competing agents in other brokerages.
Stamp Tax: The Stamp Tax, otherwise known as the Transfer tax is a tax that is paid for the transfer of the title from the seller to the new buyer. Each state is different, but in Massachusetts we have one of the lowest transfer taxes in the country. The Massachusetts Stamp tax is $4.56 per thousand. So, for a property transfer of $100,000 then $456 is owed to the State of Massachusetts at closing.
Condo Packet: Condo Packet (If Applicable) is an expense that normally the seller pays once under agreement. We often see fees for condo due diligence requests for the larger condo associations that are run by management companies. These fees can be collected by management companies for sending of condo docs and current fiscal year budget as well as the 6D which is a requirement in order to be able to close. The condo docs, budget and meeting minutes are needed for the buyer to do their due diligence on the condo association. Without this due diligence, most buyers will not feel comfortable moving forward. A mortgage company is also not able to underwrite a mortgage without these items.
Title V: Septic Inspection (If Applicable) is needed for homes that have a septic system. In Massachusetts, a property with a septic system is required to get a Title V done in order to trade. The cost of this Title V we estimate to be from $500 to $1,000. This does not include any improvements that may need to be done in order to bring the Septic System up to passing grade. If the Title V fails, then it does not mean that a property owner can’t sell a house. They still have options.
Home Warranty: Purchasing a Home Warranty is an option for a seller to give to the next buyer. Many times these are done with homes that have older systems. There are many different companies and levels of protection that are available for homeowners and buyers. Here is an example of the types of coverage and cost at Home Warranty of America – ATTACH LINK
Attorney Fee: When selling a home in Massachusetts, you will need to retain an attorney at some point in the transaction. If a buyer and seller are not using a standard Purchase & Sale Agreement, then they will need to have an attorney draft this agreement. A seller will also need an attorney to draft the deed and order the final payoffs for closing. It is always recommended to specifically hire a Real Estate Attorney vs. a General Practitioner. Think of it this way, you wouldn’t want a knee Doctor performing your Brain Surgery. Real Estate law is no different. A specialist will save you time and money in the long run. Often times general practitioners will charge an hourly fee (BAD) while a Real Estate Attorney will charge a fixed cost (GOOD). We have seen Seller Real Estate Attorney fees range from $750 to $1,500 (We have sadly seen clients get ripped off by General Practitioners in the amounts of $3 to $4,000!).
Closing Cost Credit(s): Closing Cost Credits to the Buyer are often in the form of Closing Cost Assistance or credits that are negotiated throughout the transaction. Often times, a home inspection will discover issues that must be negotiated. If agreeable, these issues will be taken care of by the seller by either correcting the issue, a reduction in price or a credit paid to the buyer (we HIGHLY recommend the latter option). Closing Cost Assistance is normally asked for by the buyer in the initial offer stage.
Smoke Inspection Fee: The Smoke Inspection is required by Massachusetts law in order to close on a property. Each municipality is different and will charge a different amount. In most cases we see the fee range from $30 to $50. Each house before closing must be brought up to current fire code and inspected by the town fire company. Getting the property to pass the inspection may require additional expense.
Other Fees: We always estimate “other fees” to be at $250. What are some examples of other fees you ask? An expense that is otherwise unknown until we are at closing is a courier fee or wire transfer fees. These fees are variable and based off of a homeowner’s specific situation.
Breaking down and subtracting out these expenses will provide you with a good estimate on how much it will cost to sell your home. These expenses do vary by state, so if you are not in Massachusetts then it would be our pleasure to connect you with a trusted local agent who can help answer all of your questions.
Hi, I am Jeffrey Chubb! It's a Pleasure to Meet You.