One of the top questions I get when I meet with my clients is centered around real estate fees, so I thought I’d review them with you today.
So there's a couple of different fees that I go over with all of my sellers. When I meet with you at your home, we'll run through a net sheet because I like to give my clients a really good idea of what they can expect to net on their home which is usually very important to them.
Real Estate Commissions
The first fee that we'll go through is any kind of commissions that you'll end up paying. So traditionally in real estate, when you have a listing agent list your home, you're going to pay them 3% to list the property and then you're going to pay the buyer's agent that brings the buyer, 3% percent. So usually we'll put that on the net sheet unless there's some other kind of agreements that we have in place.
Title Fees/Closing Costs
Usually for my sellers, I'm going to calculate a fee called the Title Policy which I usually estimate at around 1% of the sale price of the home. The Title Policy is a policy that's insuring a clean title to the new buyer in the state of Texas. While the buyer’s do sometimes offer to pay that or it gets negotiated that way, I usually set it up to where my seller’s are budgeting it in their numbers to be conservative.
I'm going to account for title fees. Usually title fees are anywhere from $500 to $1,000. Again, it just depends and I generally estimate $750.
Another item that I always include on the net sheet is a home warranty. 99% of the buyers are going to ask for a one year warranty on the home. There are some different amounts they may ask for. I generally budget about $500. If you have a pool, it may be as high as $700 or $800 to cover aspects of the pool. Again, it's not an automatic and it's totally negotiable with the buyer, however I generally like to help my sellers estimate out their fees and a best and worst case scenario so that they have a really good idea of what they can expect to net when they sell their home.
Next, I'm going to estimate in your property taxes. So let's say you close in March, you're going to pay property taxes from January through the day you close in March, so they're going to prorate that for the year. I'll figure all that out for you and 'll put that in your net sheet.
I you have an escrow account, I'll figure in a refund for you as well, which means if you are paying your mortgage monthly and some of your money each month is going to an escrow account to pay for your property taxes in your insurance, then your escrow account will be refunded to you once you close on the home.
I'll explain all that when I meet with you, but basically I will factor in a refund because you will have already paid those property taxes at closing. If you pay your taxes on your own once a year, then you don't have a refund because you don't have an escrow account, and we'll talk about that as well.
Next up if your home is located in a homeowner's association, there are often HOA fees that you'll pay. It's usually called a transfer certificate or resell certificate fee. Every HOA is a little different and I always budget $500 for that.
I usually put in an amount that we may end up negotiating with a buyer for repairs, so you can have a best case and worst case scenario and then I'll figure in your mortgage payoff. So if you owe $50,000 on the house, I'll put that in your numbers.
After that we get down to what you’ll actually net on the home and a range that I believe we can sell your home in based on my expertise and the market data.
So when we meet, we'll go over your net sheet, which will include all of these numbers.
My sellers really appreciate this because a lot of times they have an idea of the fees, but they're not sure of everything and this helps them to budget and plan their next steps.
As we get closer to closing, a lot of those numbers will become more clear as we nail down more details with an offer and contract from the buyer.
Get more home selling tips and check out this article Do I Need to Update My Home Before I Put it on the Market?