One of the biggest mistakes sellers make is forgetting about the costs associated with selling. As you prepare for the sale of your home, closing costs and other expenses will come up.
Many of these fees can be taken directly out of your closing check, while others you will need to cover the cost for upfront. Here’s a breakdown of expenses that come with selling your home:
Overall, closing costs typically come to 1%-3% of the home price. A few days before closing, your mortgage lender will send a closing disclosure, outlining the terms of your loan, including your closing costs. Below are the fees commonly included in the seller’s closing costs:
- Agent Commissions. The agent commission fee is typically split between your listing agent and the buyer’s agent. If you are selling your house on your own, you may still need to cover the commission of the buyer’s agent.
- Transfer Tax. The transfer tax, or conveyance tax, includes transferring the title of the property to the new owner. In Connecticut, both state and municipal conveyance tax fees are paid by the seller.
- Title Insurance. Title insurance protects the new owners from any liens or homeownership disputes, and is typically paid for by the seller.
- Escrow Fees. Escrow fees, usually split between the buyer and seller, go to the escrow service that holds funds until closing day.
- Attorney Fees. Many states require an attorney for closing day. Their fees are typically due at closing.
Preparing Your Home
For your home to be at its most appealing, chances are some work will need to be completed before you list it for sale.
- Staging Costs. Staging your home can make all the difference in listing photos and live showings. Fortunately, you can stage your home at any budget.
- Repairs. Sometimes, you can take care of known issues before selling your home. Other times, a surprise may appear during home inspection. Either way, set some money aside for repairs.
In addition to getting your home ready to sell, you also need to factor in a new place to live, and in some cases, you may have additional taxes to pay. Consider which costs apply to your situation:
- Moving Costs. The further away you are moving, the more it will cost. Consider the price with and without professional movers.
- Costs associated with your next home. If you are buying a new house, you will need a downpayment and closing costs on the buyer side. If you already have a new place to live, you may be paying two mortgages (or one rent and one mortgage) while you wait for your home to sell.
- Mansion Tax. In Connecticut, there is an additional tax called the mansion tax for sales exceeding $2.5 million.
- Prorated Fees. You are responsible for property taxes up until your closing date, as well as HOA fees, when applicable. This can result in a prorated fee at closing.
There’s no way around it: moving costs money. But when you prepare ahead of time, it becomes less of a financial burden, allowing you to focus on getting settled in your new home.
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