LET’S DO THE NUMBERS BEFORE YOU SELL YOUR PROPERTY

by Evelyn Alcala, MBA Realtor, alcala.evelyn@gmail.com

During my years of experience in the Real Estate business, I have come to realize that many home sellers are not aware of all the costs involving the sale of a house.

Let us do a simple exercise to better understand the framework of costs associated with the sale of a property here in Florida and thus come up with a better financial plan for your investment.

When you set the sale’s price of your property, the realtor should check into the current condition of the market and probably do a CMA for you, which is a Comparable Marketing Analysis, taking into consideration the features of the property and other similar information around the area where the property is located. We will discount from this initial price, the sale’s expenses. From this point on, you will be ready to negotiate the final price to close the deal if you are presented with a counter offer.

If you turn your house over to me for selling, the first thing we need to do is deduct the total amount you owe the bank at the time of closing. We get this amount from the agency who holds title to the mortgage.

Once the sales contract is received, you will hire a title company who is the other player in the transaction and who pays the seller’s and buyer’s fees. Such expenses are: The States Seal for the document which is the tax, charged by the State for the sale or transfer of the property. This stamp tax imposed by Florida over the transfer of Real Estate has a cost of $.70 cents for every $ 100.00.  This closing cost here in Florida is picked up by the seller as a general rule. For example, if you sell your home from $ 350.000, you owe the State of Florida $ 2.450.

Along these discounts, there is the Fee for the title company which is a fixed cost for each document: search of title, assessments, closing fees, mailings, filling out fees, etc. the total cost would be between $ 750 and $ 1250.

As far as the title insurance for the owner, it is customary that the seller pays for this expense. However, it can happen that the buyer may decide to put it on his Title company and he picks up the cost. This is a mandatory coverage, since it protects the property from the buyer until it is sold. The cost of the insurance title may be from the $ 650 to $ 750.

Another item that you must consider when selling a house is to calculate your property taxes which you must turn over to the buyer in order to cover your part of that expense at the end of the year. If the property has an unpaid tax of about $ 3.800 this year, you should divide that into 365 days and multiply it by the number of days from January 1st, until the day before closing date. So, if your house is sold in April, you, as the seller have lived in it for 4 months but the bill for the property tax will not arrive until the following year! In all fairness, the tax is pro-rated and the seller will credit the buyer the equivalent to those 4 months until the closing date. In this case, would be $ 1.238.90.

At the end of the expenses list there is the Broker’s Fees, or the commission for Real Estate in Florida in the sale of your property. You must understand that the commission is negotiable, but it is the fees for Buyer’s Agent and Seller’s Agent they get paid for their professional assistance in the whole process. Real Estate companies that offer a full service will charge from 4% to 7% of the price of the property, Although the result is more like 5% to 6%. Any Real Estate company that does not offer full service will naturally charge less but be aware that you will get what you pay for.

Now that you know your costs in selling your property, you can better plan your finances at the end of the day. If you have any questions, you may e-mail me at alcala.evelyn@gmail.com

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