Buying or selling a property is exciting. But it is also expensive. Most purchasers or sellers are unaware of the costs that are associated with the process. Whether you are buying a new home or selling a home it is important to know exactly what to expect at closing. Unfortunately, many buyers and sellers are unaware of the extra costs associated with purchasing and selling a home. Fees can add up quite fast, and no one likes being surprised with an increased budget. Being prepared can go help make the transaction much smoother for both parties.
When Selling Your Home
One of the most stressful parts of selling a property is pricing the property correctly. A price that is too high will keep buyers away and keep your home on the market for far too long. In contrast, a price that is too low will decrease your profit potential. As you price your home or property, keep in mind the additional costs that could pop up and add those into your original price point.
First, most sellers will hire a real estate agent. An agent helps list and sell your home, which is invaluable. However, that service comes at a price. Typically, an agent receives a commission between 3%-6% of the selling price.
There are additional expenses that go into ensuring a quick sale including lawn maintenance, painting, carpet cleaning, and other repair costs to get your home looking its best. The most expensive of these extra costs can be staging. This service can certainly pay off, making your home look amazing and appealing to buyers, but the cost to you can be more than $1,000.
Once your home is sold, closing costs come into play. Typically, sellers pay far less than the buyer, but costs can be 2%-5% of the selling price. A seller needs to be prepared to pay pro-rated property taxes and HOA fees in addition to closing costs as well. Knowing that all these fees and expenses are necessary can help a seller be better prepared when the day comes.
When Buying Your Home
The buyer can often have more costs to be aware of than the seller. Many of these fees come from the mortgage lender, who can charge loan origination fees and underwriter fees. Lenders will also request home inspections and title searches which can add to the extra fees associated with the home purchase.
In addition to these fees, it is important to remember the costs of real estate agents and lawyer fees. When it is time to close, most lenders will require you to have a certain amount of money in an escrow account along with the down payment and closing costs, which can be 3%-4% of the home price. There are ways to help reduce some of these costs by rolling them into your mortgage, closing at the end of the month or applying for an FHA loan.
With so many factors going into buying and selling a property, it can begin to be quite overwhelming. Having an experienced real estate lawyer by your side is valuable. Your real estate attorney will advocate for your best interests and keep you in the communication loop.
If you are looking to make your buying or selling experience as easy as possible, the professionals at Bell & Shah are ready to become your partners during this exciting time. Call us today to get started.