Selling or buying a home is a major financial decision in your life. You need to understand the expenses in selling your home. Here is a summary of the costs that you can expect.
Commissions: 5% of Selling Price
The commission that you will pay is 5% of the sale price. This is divided equally between the listing broker (Madeline Schaider Real Estate) and the buyer’s broker — 2.5% to each. You pay nothing in advance; this payment comes out of the escrow account at the completion of the sale.
Example: If your home sells for $2M, the total commission will be $100,000.
If Madeline Schaider Real Estate represents you in a sale and in the purchase of a replacement home, you will receive a refund on the final sale price of the property of lesser value. The refund amount is negotiated, and could be, for example, 0.5% to 1%. You must buy the replacement property within a year of the sale of your original home.
Example: If your home sells for $2M, and you buy a replacement home for $3M, you could receive a refund of 0.5%, or $10,000.
If Madeline Schaider Real Estate also represents the buyer of your home, you will pay only a 4% total commission. This arrangement to represent both you and the buyer is known as a “dual agency.” You and the buyer must agree to this in writing. We prefer not to do dual agency sales, but it is sometimes necessary to get the best sale price for your home.
Example: If your home sells for $2M, with dual agency you will pay a total commission of 4%, or $80,000, a savings of $20,000.
Required Inspections and Reports: Estimated $700
Resale Report. Every city requires a resale report that may include an in-person inspection of your property. The report addresses building permits recorded for your home and safety issues, The cost is about $200.
Fire Safety Inspection and Report. A fire safety report is provided by the local fire department. This examines potential fire hazards adjacent to your home and specifies required or recommended corrections. The inspection and report are about $200.
Sewer Lateral Inspection. Most cities require a video inspection and report on your sewer lateral line. This portion of the sewer line runs from your home to the main line in the street. Based on this report, the city may require repairs or replacement of your sewer lateral. The inspection and report are about $200.
Natural Hazard Disclosure. This third-party report provides a comprehensive account of any natural hazards that may affect your property, including flooding and fire risk. The cost is $100.
Recommended Inspections: $1,200-$1,700
The current practice when selling a Marin home is to obtain professional inspections of your home before you offer it for sale. These inspections detail the current condition of your house. Inspection reports will be available to potential buyers as part of the disclosures that we provide.
The inspection reports result in simplified sales and often a greater profit for you. Since home sales are “As Is,” buyers are informed of existing issues, and they are less likely to ask for a reduced price or financial compensation for repairs. For high-cost items, like a roof or sewer line replacement, we may also obtain cost estimates from contractors and include these in your disclosures.
Madeline chooses inspectors that are recognized by buyers’ agents. Most buyers will not re-inspect your property.
Structural inspection. This inspection evaluates the condition of your home, including its foundation, drainage, siding, windows and door, electrical system, plumbing, roofing, heating, and improvements. The inspection and report are about $850.
Pest Inspection. This inspection checks for the presence of termites, wood-boring beetles, rodents, and dry rot caused by dampness. The inspection is about $350.
Roof Inspection (optional). If the structural inspection indicates roofing issues, a roof inspection will confirm these issues and provide a cost estimate for repairs or replacement. This inspection is often free.
Drainage Inspection (optional). If the structural inspection indicates drainage issues under or around the house, this inspection will confirm the conditions and provide a cost for repairs. The inspection is about $300.
Estimated Closing Costs
In Marin County, buyers pay most closing costs. However, you will pay these closing costs out of escrow at the completion of the sale:
- County transfer tax is 1.1% of the sale price. On a $2M sale, this is $2,200.
- City transfer tax, only in San Rafael, is 0.2% of the sale price. On a $2M sale, this is $400.
- Interest payments on your existing mortgage since your last payment.
- The balance of your mortgage.
- Property taxes until closing. This depends on when last paid your property taxes. If you are paid past the date of sale, you may receive a refund.
- Title and escrow fees. About $600.
Estimated Cost of Improvements
To obtain the best price for your home, it is important to present a property that appeals to buyers. This could cost from $0 to $150,000. In our experience, we have found that improving the appearance will yield a 2-5-fold return on your investment, and your home will sell faster, with more offers.
Here are a few considerations concerning improvements to your home:
- Appearance is critical. If your home looks good, buyers will be attracted, and they will tend to overlook shortcomings, for example, the lack of a garage. Buyers shop for homes on the internet, and most look first at your home on the internet, and then decide to visit if they like what they see.
- You must satisfy the expectations of younger buyers. For example, they like wide plank oak floors, white walls, quartz countertops, and stainless-steel appliances. They may not value the styles and finishes that you like.
- Buyers will focus on items that you neglected to improve, for example, a worn garage door. This may create a question, “What else have they neglected?”
- Young buyers have considerable buying power, but not time. They are busy working and raising children. They typically want a house that is ready to live in. They may be uninterested in and inexperienced in remodeling projects.
At Madeline Schaider Real Estate, we understand how correct preparation is critical to closing a sale. We can advise you on the best ways to spend your improvement dollars for the highest return. We will go over every detail with you to enhance the potential of your home and to emphasize what’s important and available for optimal return on your investment.
