Understand The Real Costs of Selling a Home

Perhaps you are living in your first home, one you purchased many years ago or even just recently. In a very real sense, it doesn't really matter when you purchased your present home because everything has changed in the last couple years and now every homeowner needs to pay attention to changes in the cost of selling a home. Things have really changed as regards closing costs in all areas of the country. It's a good idea to check up on the basic closing costs before you price your home for sale.

Probably the biggest change I've seen over the years is that buyers have developed an expectation that sellers are obligated to pay for certain costs, something that was not formerly a common practice in the sale of residential real estate. One example is stipulation of allowances such as a roofing allowance or a carpet allowance.

I'll explain briefly in case you are not familiar with this practice. Basically, an allowance reflects the seller's admission that there is a repair, replacement or upgrade needed to bring the house up to its best condition. Rather than lower the selling price of the house, the seller agrees to provide a rebate at the time of sale. For example, a $100,000 home with a $10,000 roofing allowance means the seller receives $90,000, minus his or her mortgage balance and other selling expenses of course. The cost of selling a home is increased when the seller offers an allowance to the buyer.

When you sell a home, another way that the cost of increases is when the seller either offers or is asked to pay a portion of the buyers' financing costs. This has been a somewhat common practice in the real estate industry for quite a few years now. It's called "seller's concessions" or "paying points" or a variety of other terms, depending on the situation. Since the price of homes has increased and the percentage of the selling price that is required for a down payment has also increased, buyers are often pressed to the limit to come up with their own closing costs.

Most sellers are motivated enough to do whatever it takes to sell their homes, even if that means paying additional expenses that dramatically increase the cost of selling a home. That's why I say every seller needs to consider these potential cost increases in advance, so that he or she can set a realistic selling price up front. Knowing that there may be allowances and concessions that reduce your bottom line and knowing how much to expect in terms of closing costs on your sale will give you a much more reliable foundation from which to see your prospective transaction and your eventual proceeds check.

Comments? Questions? Email Here

© HowtoAdvice.com

How to Advice .com