How Much of the Sale Price Do I Get?
This is a truly important question that many unfortunately misunderstand. Many people believe that if they owe $300,000 on their home and can sell for $305,000 then they can make $5,000. So, I want to clear up for you what the true cost to sell a home is and, therefore, how much you may make on your sale.
Listen along!
The Maroon Group Podcast
It is common for a seller to pay between 7 and 10% of the total purchase price to sell their home. Meaning, if you sell a home for $300,000 it’s likely to cost between $21,000 and $30,000 to sell. Whatever is left is your profit.
Here is the number breakdown:
Agent Commission - The biggest expense is the real estate agent commission which is typically 6% of the total purchase price. 3% goes to the agent who helps you sell and 3% goes to the agent who helps the buyer. It seems like a hefty amount, and I certainly respect that, but keep in mind, you are hiring a professional to protect your largest financial asset in the world. Such a commitment deserves a qualified, well-paid professional. Just make sure you get a good one. If you don’t know a good one ask a friend or call us.
Termite and Moisture Repairs – in Virginia, you are required to provide a clear termite and moisture letter for a buyer before they can get a loan. Any required repairs will have to be done. That cost typically runs between $500 and $1,000 but can be higher or lower.
Home Inspection Repairs – once the buyer gets their home inspection done there is another round of negotiating any repairs a buyer wants done in order to purchase your home. This cost typically ranges from $500-$1,500 but, again, could be higher or lower.
Seller Closing Costs – this encompasses the cost of your lawyer who draws up all your paperwork, any uncollected real estate taxes, HOA dues, etc… this is typically $1,000-$1,500
Buyer Closing Costs – as part of the contract negotiations, the buyer can request a seller cover some or all of their own closing costs which typically hover around 3% of the overall price.
So, the cost can vary quite a bit. A good real estate agent will prep you ahead of time and then give you updated numbers once you receive an offer. Some of the cost is fixed like commission but others vary so make sure you have a good cushion for the sale.
Once those fees are paid, you will payoff any remaining balance on your current mortgage and the rest is your profit.
So, let’s say you still owe $250,000 on your home. Then, you sell your home for $300,000. It costs you 10% total to do so. Your net profit is $20,000.
If you have any other questions or want to explore further just reach out to us and we would be happy to explain!