As one of the least well-understood aspects of selling your home, closing costs tend to quickly eat away at the profits from selling your home. To gain a better grasp of how things will work for you once your home is sold, let’s go over what New Jersey home sellers should know about closing costs.
What Are Closing Costs?
While the name doesn’t give you many specifics, it’s a good way of summarizing what is going on: Closing costs are fees being paid in order to close on the property in order to transfer ownership between seller and buyer.
Both buyer and seller have their own sets of these costs, but, as the seller, you can expect the closing costs to land somewhere between 6 and 10% of the final sales price of your home. As you can see, it’s no small dent in the proceeds of selling your home.
If you’re selling your own home, make sure you are aware of any and all additional fees prior to closing. In the event that you have employed the services of a real estate agent, they should be going over expected costs well in advance to financially prepare you for closing.
Additionally, your agent will cover the details of your closing costs when looking at adjusting your home’s listing price.
How Are They Divided Up?
The closing costs associated with selling a home are very different from buying a home.
Seller closing costs pay sales taxes, title insurance, and title transfer. What most often ends up totaling the largest portion of this amount is the seller paying for the commission of both buyer and seller real estate agents. It’s common to find both homebuyers and sellers that are under the impression that they each pay their own agent’s commissions, but it’s the seller that is traditionally responsible for both of these.
This is a point that can be worked out during negotiation, and a seller with decent leverage should be willing to press this issue with little worry.
Can They Be Avoided Entirely?
One of the more common questions sellers have about closing costs is if there’s a way to dodge them completely. While getting around some of them may be possible, it is unlikely you will be able to avoid them completely.
Considering the massive sellers’ market that currently exists, you could use having the buyer pay closing costs as a bargaining chip. In turn, you could then offer to slightly cut the price of your home, but not less than the savings of avoiding your closing costs.
This may seem like a silly move, but you have to remember that the buyer is likely in a position where they feel immense pressure to make quick decisions. Providing a bit of give and take when buyers are so focused on the closing price of the home may allow you to skirt a large chunk of your closing costs as the seller.
Depending on where you live, the seller may be legally required to pay the portion of these costs that are related to taxes.
Finally, all sellers need to remember the amount of money they have spent on fulfilling repair and maintenance concessions in order to make it to closing.
It’s easy to forget those funds have chipped away at your overall home sales profits. Also, unless you have paid off your mortgage previously, you will have to pay off the remainder of your existing mortgage to be free and clear of the property for good.
Sellers have a tendency to lose sight of these details while getting caught up in the big picture.
Help Understanding Closing Costs When Selling in New Jersey
If you’re considering selling your New Jersey home and need help understanding closing costs, contact us today at (855) 932-8987!