Thursday, August 11, 2011

Question About the Costs if Selling a Home

 If we sell our house for 245K, and we owe 232K, the Realtor's commission is 5%, and then there are closing costs. How do we do this? Do we just show up with our check book to pay any money owed? Will there be money left over for us to have any small profit? What do we expect? Do we need to be prepared to have several thousand dollars in cash?

Here are your typical seller costs:
  • Marketing Fee/Broker Commission (using 5% as an example*)
    • $12,250
  • State Transfer/Stamp Taxes ($4.56 per $1000)
    • $1117
  • Deed Preparation
    • $150
  • Recording Fees (mortgage discharge)
    • $75
  • Misc Charges (tracking, Fedex & payoff fee, etc.)
    • $200
These fees would total $13,792. Subtract this from the selling price and you end up with $231,208 towards paying off your mortgage, so you would have to bring $792 to the closing table to pay off the balance of your mortgage. Typically, you would have to bring a bank or certified check for that amount to the closing.

These numbers are only examples. Your mortgage balance changes daily. This example also does take into consideration any real estate taxes that are due or paid in advance on the date that the property closes, so the amount could be more... or less. The attorney or title company handling the closing will be computing the final numbers, so that it the best person to talk to.

*The 5% commission rate is used as an example only. Each company or office sets its own fee structure. By law, all real estate commissions are negotiable.

Monday, August 08, 2011

Questions About Commissions and Contracts

How much does a real estate agent charge for commission? Is there a grace period in the listing agreement in case I change my mind?

By law commissions are negotiable. Each agent or company sets their own commission rate, and each one decides how much, if any they will negotiate. With our company it varies by each property. If a seller wants try "try" a higher selling price than we recommend, we charge a higher commission because it is going to take longer to sell the property. The same goes for properties that is going to be a short sale because it is a lot more work for us and takes longer to close. If the property is in a location that sells very quickly, and the seller listens to our expert opinion on listing price, we may consider lowering our commission.

Before you enter into a listing contract, make sure you really want to sell your home and do not just want to "test" the market. There is typically no "grace period" in a listing contract. However, just like other relationships, sometimes you find out it's just not a good match for the long haul. Make sure the agent (and broker/company) gives you an easy out option if you feel the agent is not meeting your expectations so you can move on (and get it in writing). But remember to give the agent you do choose a chance. Just because you don't receive an offer in the first week or month doesn't mean your agent isn't marketing your property correctly. This is a difficult, unpredictable market for even the most seasoned experts.

Good luck. Contact me through Trulia if you have any questions.

Jim Armstrong
Armstrong Field Real Estate

Monday, August 01, 2011

Mortgage Interest Rates Tick Up

Rates Tick Up

     In Freddie Mac's results of its Primary Mortgage Market Survey the 30-year fixed-rate mortgage averaged 4.55% for the week ending July 28, 2011.
That is up from the previous week when it averaged 4.52%. Last year at this time, the 30-year fixed-rate mortgage averaged 4.54%.
Macroeconomic data released this week were a mixed bag. On the positive side, the index of leading indicators in June rose for the 2nd consecutive month. Partly offsetting this, orders for durable goods were weaker than market expectations for the same month.

Mortgage Rates
U.S. averages as of July 28, 2011:
30 yr. fixed:   4.55%
 15 yr. fixed:   3.66%
 1 yr. adj:        2.95%