How Much Money Do You Get To Keep When You Sell Your Home?

How Much Money Do You Get To Keep When You Sell Your House?

 Almost all real estate closings are never exactly alike. Most closing costs are standard, while others depend on various factors related to the sale. However, when you sell your house, the amount of money you get to keep is contingent upon what closing costs you’ll have to satisfy.

The Mortgage: If you do not own your home outright, your mortgage lender will probably take the biggest chunk out of the money you make from the sale of your home. It is impossible to sell your home without satisfying your mortgage obligation at the time of your home’s closing. Also, there are other fees which can be associated with your obligation to the mortgage lender. One such fee is a cancellation fee. The cancellation fee is a fee that is charged when a mortgagor satisfies his/her mortgage early, often before the mortgage’s full term. For example, if you have a $600,000 mortgage, including the cancellation fee, and you are able to sell your home for $800,000, you will have $200,000 in proceeds from the real estate transaction. However, you probably will not to keep all of this money because there will be other closing costs associated with this transaction.

 Commissions; Real Estate agents who help their clients find a buyer or negotiate a sale are compensated for their time and effort. Real estate agents are paid on a commissions basis, which can often be as much as 6% of the sale price of your home. Often times, an exact commissions percentage will depend on what was agreed upon within the listing agreement, and often times this can be negotiated downward. If you and your agent have agreed upon 6% commission, your agent will typically receive 3% of that commission, and the buyer’s realtor with receive the other 3%. That means if you were to sell your home for $500,000, you’ll pay the realtors $30,000, unless you also negotiate with the buyer to cover some of this cost. If your mortgage was 600,000, you’ve now got $152,000 left.

 Repairs: If your home needs some repair work, you may have to cover some (if not all) of those repairs as a part of your contract of sale. Almost all real estate transactions involve some form of inspection, and the inspector may find various problems with the property. You are responsible for fixing these issues, and these costs will be deducted from the proceeds at closing time. If these repairs total $2,000, you’re now left with $150,000.

 Other Closing Fees: Sellers bare the burden of covering some of the closing costs, and your share will come out of the proceeds of the sale of your home. Examples of such costs are attorney’s fees, taxes and fees involved with transferring title of your home to the purchaser, as well as other fees. Also, if you owe any real estate related taxes up until the date of the closing, these will be taken out of your proceeds as well. Seller’s often times have to pay for a title search to ensure that there are no hidden liens against your property and that you are free to transfer the title of the property. If these fees add up to $1,000, you will now be left with $149,000.

Liens: If any liens exist against your property, you must all of them off in their entirety before you can transfer title of your property to the buyer. Liens can arise from various issues such as past due child support obligations, civil judgements, or a judgement from a creditor. Hopefully you will not have any liens against your property. However, if you do, they could quite possibly deplete any of the proceeds that you have left after the payment of commissions, repairs, closings costs, and the costs associated with your mortgage. If these costs are more than the proceeds of the sale of your home, they will have to come out of your pocket before you can sell your home. 

 

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