Hand Holding CashHow much does it cost to sell a home?

I have been asked this question many times by many sellers in the Twin Cities. If you are reading this article from another area, your numbers may be different. Real estate is local, and the cost to sell a home is also very local. I'll be writing this for people that live in the Twin Cities Metro Area.

The cost of selling a home varies depending on the sales price of the home. To keep things simple, I'll use the average commission I charge to sell a home of 6%. From there, some of the fees include paying for buyers' closing costs (Why you should pay for buyers closing costs), the closing fee ($325-400), conservation fee ($5), state deed tax (0.0034 of sales price, or $340 per 100,000), recording and service fees ($100), RE/MAX Results broker commission ($449), and an adjustment for county taxes. This last one is a complex calculation.

County Taxes

In the metro area, we pay taxes twice per year, May 15th for the period between January 1 and June 30th, and October 15th for the period July 1st through December 31st.

To calculate for county taxes, there are 4 periods of the year where either you subtract, or you add to your closing costs. If your closing date is before May 15, you will pay a prorated tax amount based on how many days you lived in the home. Example: If you close on Feb 28, you will pay taxes for January and February for a total of 31+28 days out of 365 days in the year. Take your annual taxes, divide by 365 and multiply by 49.

If your closing date is after May 15 but before July 1st, you will get a credit on your taxes because you paid through June 30th, but didn't live in the house all those days.

If your closing date is July 1st through October 15th, you will pay taxes for the amount of days from July to your closing date.

If your closing date is October 15th through the end of the year, you'll get a credit.

Kiss - Keep It Super Simple

If you want a very quick and easy way to calculate your bottom line net, this is the easiest way:

Take a total of 10% off your gross sales price. It is broken down like this: 3% buyer's closing costs, 6% commission, 1% seller's closing costs for a total of 10%.

An example is this: $200,000 sales price = $180,000 minus any mortgage you might have. It's quick, it's easy.

If you have a higher priced home, and in your bracket most buyers are paying their own closing costs, then you can take the 3% out. If you negotiate a different commission, you can change the 6%. I just used 6% because that's my average selling commission. All commissions are negotiable.

NOTICE: The compensation for the sale, lease, rental or management of real property shall be determined between each individual broker and the broker's client.

© Copyright 2021 - Steven Hong - All Rights Reserved. Each office independently owned and operated.
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