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Old 12-15-2009, 10:01 AM
 
Location: North Carolina
756 posts, read 1,654,392 times
Reputation: 289

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So many of us THINK our house is worth $X thousand. But You will never net close to that.

Take a $300,000 house.

To sell, you first off agree to pay Real Estate agents $18,000. EIGHTEEN THOUSAND dollars! That is 33% of the MOST my wife and I ever made in a year as AGI (1040 form, line 40).

A title policy will run you about $2,000 more.

Escrow Fee: $400. Warranty: $350. "other fees: $300.

Taxes will vary, depending on the time of year, how much they are annually, etc. But you can count on a few hundred at the very least.

Interest on your mortgage is paid in arrears, so plan on that, too - probably a few hundred.

Don't forget moving expenses - not part of the cost of selling per se, but if you sell, you have to go somewhere! That can be a few hundred to several thousand, depending on how far you move and how much stuff you move.

Running the numbers for my situation, I come up with about $28,500 to sell the house for $300K. That leaves about $271,500... but that is BEFORE you subtract what you owe on the house. Your numbers will vary.

So you pay about 9.5% of your home value to sell it and move... before you deduct what you owe. So how much do you have to put down on your next home?

Just food for thought.

Last edited by GuyFriendly; 12-15-2009 at 10:02 AM.. Reason: oh... and then there are the costs to BUY a new house....
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Old 12-15-2009, 10:08 AM
 
28,453 posts, read 85,403,413 times
Reputation: 18729
A good post!

I routinely TRY to remind folks that moving BEFORE your home has grown in value by more than 20% can be a costly mistake, of course for those that NEED to move there is not much that can be done and for those that got spoiled by house prices increasing by that amount or more in a very short time have not needed to do the analysis, but to those who grasp the seriousness of what they face the downsides can be sobering!
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Old 12-15-2009, 10:31 AM
 
Location: Marion, IN
8,189 posts, read 31,240,440 times
Reputation: 7344
Interesting.

I have not had a mortgage on my last couple of houses, so my numbers are lower. Still, there is the commission and closing fees. Until this last sale I had never paid more than 5% to my agent. This one charged 7% but was worth every last penny.

We bought a cargo trailer for moving so that was a one time expense that has saved us thousands of dollars over the last few moves.

There are ways to mitigate some of the cost.
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Old 12-15-2009, 10:36 AM
 
Location: Barrington
63,919 posts, read 46,758,281 times
Reputation: 20674
Quote:
Originally Posted by GuyFriendly View Post

Take a $300,000 house.

To sell, you first off agree to pay Real Estate agents $18,000. EIGHTEEN THOUSAND dollars! That is 33% of the MOST my wife and I ever made in a year as AGI (1040 form, line 40).agents

In all cases, the listing and selling brokers, not the agents, collect the fees. The brokers split their share with the agents.

Common commisions in the greater Chicagoland area are 5%. To put this into perspective, sales tax in Chicago is now a whopping 10.25% There is also a 15.4% downtown hotel tax.

Most businesses could not be sustained and employ anyone if they were limited to the margins common in most real estate transaction.
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Old 12-15-2009, 10:37 AM
 
Location: Tempe, Arizona
4,511 posts, read 13,583,796 times
Reputation: 2201
Quote:
Originally Posted by GuyFriendly View Post
...To sell, you first off agree to pay Real Estate agents $18,000. EIGHTEEN THOUSAND dollars! That is 33% of the MOST my wife and I ever made in a year as AGI (1040 form, line 40)....
Yes, but this can be negotiated (as you did), not to mention alternative selling models that can be much cheaper (but with possibly higher risk to the seller). Also, to put it in perspective, it is usually split 2 ways (selling and listing agencies), and the agents more than likely get a substantially lesser amount after their brokers take away splits and fees. MaM has a good post on this here. Not to mention the risk of not selling, in which case they get nothing (actually, less than nothing after expenses).
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Old 12-15-2009, 12:40 PM
 
Location: Hoosierville
17,426 posts, read 14,657,652 times
Reputation: 11643
Quote:
Originally Posted by middle-aged mom View Post
Common commisions in the greater Chicagoland area are 5%. To put this into perspective, sales tax in Chicago is now a whopping 10.25% There is also a 15.4% downtown hotel tax.
And don't the conventions at McCormick pay $865 for a case of pop and $33 per Twinkie?

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