With home prices surging, sellers are seeing home values in their communities sky rocketing. Most sellers have an idea of what their home may be worth, but how does that translate into money in your pocket when you sell? When selling your home, there are cost sellers need to consider. What are those costs you ask…..
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Title Insurance
Title insurance is typically provided by the seller in Colorado. Title insurance protects over ownership. This policy protects the buyer from any liens created by the seller. The title company conducts the closing and prepares all the paperwork, but what they really do is insure over ownership. They make sure all liens on the property are paid prior to transferring a deed to the new buyer. This policy protects the buyer from liens that may arise from the previous owner. What does this policy cost? It depends on the purchase price of the property. On a $300,000 home, a title insurance policy will cost around $1200. There are discounts on these policies if a seller has had title work pulled in the past 5 years. So if you’ve owned your home for less than 5 years or if you’ve refinanced your mortgage in the past 5 years, your policy will be reduced by several hundred dollars.
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HOA Status letter fees
If you live in an area with an association, you probably have an HOA status letter fee. When you sell your home, the title company needs the HOA to send a status of your account. Is the seller current on their dues, delinquent, ect. The HOA charges a fee to provide this information. HOA Status letter fees can range from $150-$500.
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Taxes
In Colorado, taxes are paid backwards. When taxes are paid, they cover the previous year’s taxes. So when a seller closes on their home, they have to give the buyer a credit for the portion of the year that the seller has lived in the home. For instance, if your taxes are $1000 a year and you plan to close on your property July 1st, the seller would owe the buyer 6 months of taxes (Jan 1st– July 1st). In this scenario, a seller would give the buyer a credit for ½ the years taxes, so $500 roughly. Well, what if I escrow my taxes (pay them in my monthly payments to my bank)? You will still need to pay this at closing even if you pay taxes in your monthly payment. You won’t lose out on that money! When you make your payment to your bank, a portion of your payment goes to an escrow account held by your bank to pay for taxes. Once the title company pays off your mortgage, your bank will refund you the funds in your escrow account. It takes about 30-45 days for you to receive those funds from your mortgage holder.
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Realtor fees
The seller is responsible for all Realtor fees. When you bought your home, you probably didn’t pay the Realtor who may have helped you because he or she was paid by the listing broker. The seller hires a listing broker and pays a commission of x%, when a buyer’s agent brings a buyer the listing broker pays that buyer’s agent a portion of the x%. There are no standardized fees when it comes to commissions. Cost are determined by the Realtor’s brokerage firm. Always ask if the broker or brokerage firm charges any additional fees on top of the x%. Sometimes you see some firms charge an additional administrative fee that could be as much as $500. Make sure to ask the broker to know exactly what you’re paying.
When you’re interviewing a Realtor, they should provide you with an estimated net sheet along with your property’s market Analysis. This Net sheet will give you a breakdown of all the fees associated with your home sale. If you are thinking about selling your home, feel free to contact us for a market analysis. These reports are free and there is no obligation. We’d be happy to help!
