Glad you asked! This is a Valid Question. Sometimes, the real estate process can feel as though the Costs are not readily discernible or understandable. Because a real estate transaction coordinates the services of different specialties such as title work, required inspections, real estate services and state and local sales tax, this can be a little intimidating.
PLEASE NOTE: This post was originally written in 2007. It has been revised and updated to reflect some additional information about a home selling with a Short Sale. It remains one of the most visited posts on this blog. We understand. We don’t like surprises either, so it helps to know WHAT to anticipate when selling your home. Always remember you can always contact AUDU REAL ESTATE for a FREE HOME SALE ANALYSIS
To simply the process, I’ve compiled a comprehensive list of costs that may be a part of a real estate transaction. Your home is unique however, so to get a detailed analysis which relates to your specific situation you should contact a qualified real estate specialist. I find it helpful to think about the Costs of Selling Your Grand Rapids, Mi home in 3 categories. They are as follows:
Home Warranty: If you choose to purchase one will run approximately $350 ~ $375 for the average single family residence. If your home has additional amenities which you would like covered by the program or has been vacant for some time, you will want to get a certified quote from the company you choose.
Home Staging: An appointment will typically run between $100 ~ $150 for an initial consultation. If further work is ordered, this is usually quoted on an hourly basis plus costs for materials. Home Staging can significantly enhance the Value of a Home and may actually increase your Net profits by thousands of dollars.
Home Inspections/Appraisals: These are usually paid for by BUYERS. However, some home owners prefer to know about issues before their homes go on the market, so these items are not a detraction to potential buyers. An appraisal ordered prior to placing you home on the market can be a powerful support to a Certified Market Analysis performed by a Real Estate Broker. These 2 items will range between $195.00 ~ $375 for an appraisal and $300 ~ $450 for a typical set of complete inspections.
Home Repairs: To facilitate your home sale, you may have to do some minor or major repairs. If a new roof is required, this may cost several thousand dollars. On the other hand, a little painting and sprucing up may be a much smaller investment. Like staging, home repairs more than pay for themselves in faster and better offers for your home.
Sales Related Costs:
Title Insurance: The cost of obtaining Title Insurance on your home will vary depending on the sales price of your home. Most title companies will also provide a credit back to you if you have refinanced within the past 3-5 years. Your buyer will also be required to purchase a smaller policy to protect the interest of the mortgage note holder. Since these costs are revised from time to time, you should contact your real estate agent or title company to get the exact figure. At Audu Real Estate, our clients are provided with this number when they sign a listing contract and/or sell a home.
Sidewalk Inspection: The city of Grand Rapids mandates that all home owners in the city has this inspection done at the Point of Sale. The cost is $45. If the inspection indicates that repairs have to be done to the sidewalks, then the home owner must take care of these repairs in order to sell the home. The city will provide estimate and a list of approved contractors. The work must be done according to very explicit specifications. This cost can become a lien on a home if the work is not completed satisfactorily prior to the home in question being sold.
Commissions: Real Estate commissions will vary based on a number of factors in the transaction. In the Grand Rapids area, there are companies that offer Flat Fee Services in which your home is simply placed on the MLS for several hundred dollars. As a full service real estate company, we understand that the competition for homes is fierce. We provide a full menu of services which include: multi-media marketing on traditional and emerging web portals, a comprehensive strategic pricing analysis, automated response feedback, regular market updates, Open House services, Staging, Negotiation and Transaction Management Services. We also offer rebates to clients who utilize our services for more than one transaction. You many contact us for a detailed breakdown of our costs.
Sales Transfer Tax: These costs are similar to a tax on the sale of your home. These fees are charged by the State of Michigan and the local government area when a home is sold in Grand Rapids, Michigan. The fees are assessed per $500. However, a simple way to quickly calculate how much you will owe based on the price for which your home sells is to assess approximately $8.60 per $1,000.
Closing Fees: When your home closes, you will typically utilize the services of a Title Company to handle all the escrows, facilitate signing of the documents and disburse funds. The fee for this service is split between the buyer and the seller. The seller’s fee has averaged between about $175 ~ $200 in most closing offices in the Grand Rapids, Michigan area.
Overnight Fees: When you close your Loan, the Title Company will overnight your loan documents to your bank. The fee typically charged for this service is $25 ~ $30.
Administrative Fees: Many real estate companies will charge a Fee to process a transaction. This typically ranges between $195 ~ $295.
Buyer Concessions: These are fees which are typically only asked for WHEN you actually have a ready, willing and able buyer who wants to purchase YOUR home. The amount requested may vary. Typically they are 3-6% of the Sales Price. This money can be utilized by the buyer to assist with down-payment or mortgage costs. They may also be tax deductible to you as a seller…you should consult with your tax adviser about this. This fee enables a buyer who may not otherwise have been able to purchase your home to do so.
Short Sale Fees:
Over the past several years, Short Sales have increased as home owners struggle with a loss of equity as they try to retail their homes. A Short Sale is simply defined as a housing sale transaction in which the borrower owes MORE than the house can retail for after selling costs are calculated. Audu Real Estate has been processing Short Sales since 2005. While we do not charge a fee, it is not unusual for a Short Sale to be negotiated by a Third Party which will charge a Fee. A Short Sale is arguably one of the most challenging negotiations in the real estate industry today and can often take months to gain a resolution which facilitates a successful sale. We have seen fees all across the map, but the good news is that we often see these charges absorbed by the Lender when facilitating the sale. That being said, our local MLS now has has listings which clearly indicate that the buyer will be charged fees in the the range of $1,000 – $2,000 for the processing of the Short Sale transaction. So, the lesson is…if you’re purchasing or selling through a Short Sale, ask questions!
Yes, there is a Fee for over-pricing your home! Last year, home owners who over-priced their property in Grand Rapids, Michigan paid a penalty of approximately 15 ~ 25% of their home’s initial asking price in order to sell. It’s expensive to over-price your home. Over-pricing helps to sell other home’s in the neighborhood which are more in line with market values. Over-pricing costs also include additional mortgage payments and home maintenance costs.
To Avoid this penalty, please feel free to contact Audu Real Estate for a comprehensive written assessment of the costs of Selling AND a Comprehensive 15-20 page strategic Pricing Analysis.
photo is courtesty of Steve Harney’s KCM blog Keeping Current Matters
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