You’ve sold your house for more than the remaining balance on your loan, and you’re pretty excited about that (you should be!), but what happens to the extra money? Do you walk away with a Monopoly Guy bag with a dollar sign? It’s counterintuitive, but notwithstanding the fact that you sold your home for more than you owe, you may have costs that prevent you from seeing any of that.
When a deal closes, the people managing escrow make the exchanges, check to the seller and deed to the buyer. However, there are many things that eat up the total value of that check.
What many people don’t realize is that the seller is the one who pays the commission, this is generally 5 to 6% of the total price of the home (If you sold your home for $1M, you will be paying approximately $50k which is split between the agents); the specifics of the percentage can be found in your listing agreements. In the unfortunate event that the check you receive isn’t enough to cover the commission, you will have to pull out a checkbook and write the check yourself (which can be a major bummer); luckily this isn’t particularly common.
While the Buyer is usually the one to pay the closing costs, the seller may have some obligations such as recording fees and title insurance premiums.
Property taxes are typically assessed for the previous year, so when you sell your home you’re on the hook for the previous year’s property taxes (the buyer didn’t own it then); thus, you will need to pay that amount as well.
That’s right, after you have paid commissions, random costs, and taxes, you get the rest of the money! Assuming that amount is still more than you owe on your mortgage, you just turned a profit! This is the goal of every home sale, and it occurs pretty frequently.
At the Chernov Team we understand that knowledge is power, particularly when it comes to the hidden costs associated with selling your house – ultimately, we want to see you walk away with money in hand. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.