Listing property on the MLS

We can list your home, too!

If you are thinking of listing your property on the Multiple Listing Service (MLS), you will naturally want to know the costs involved. These notes should help you estimate what selling now will cost you.

Remember that when you bought your property, chances are you were represented by a “Buyer’s Agent”, who didn’t charge any fees or commission, because the listing agent who was selling the property will have split his commission with your agent. Conversely, if you ask any Realtor to list your property, the boot is sadly on the other foot and you must be charged a commission and in turn, your listing agent has to split it with any buyer’s agent who brings a buyer to the sale.

How much will this cost?

There are several costs associated with selling your property. These include;

Real Estate Commission
Legal and Professional Charges
Title Insurance
Property Taxes
Repair Costs
FIRPTA (if applicable)
Pay off outstanding mortgage (if applicable)

Real Estate Commission; Although there is no such thing as a 'standard' commission rate, the vast majority of real estate offices in central Florida charge 6%, based on the actual selling price. That is, 3% for the listing broker for listing the property and 3% for the broker who brings the buyer to the sale. Alternatively, some companies will charge varying amounts, from as little as 4% to as much as 10%. We tend to go with the flow at 6% although some of our clients are on 7% contracts, offering a more attractive 4% to buyer's agents.

Which alternative you go for is largely dependent on how quickly you wish to sell. Logically, 4% is more attractive to a buyer’s agent that 3%, and although in theory, agents should not be motivated by the promise of a higher fee, human nature often tells a different story.

Why not consider offering a bonus?

If you are looking for a real incentive to sell your home quickly, you can always offer a bonus, either to the buyer's agent or even to the buyers themselves. A buyer's agent bonus of say, $500, $1,000, $5,000 or even higher, in addition to the basic percentage, perhaps if a buyer's agent can get a sales contract and close by a certain date, could give you a good advantage over other properties which are your competition. For example, you could offer 3% commission plus a $5,000 bonus if the sale can be completed in 30 days. Money does talk!

You could offer a bonus that is dependant upon the buyer offering the full asking price. That will discourage the agent from asking you to drop the price, although realistically, in 2008, chances are all offers received will be $10,000-$20,000 below what you are asking. That is the downside of selling in a buyer's market.

If you do opt for a bonus payment, please be assured that the bonus would only go to the Buyer’s agent and not to the listing broker. However, if we bring the buyer to the sale and also represent you as the seller, we can sometimes agree a discount – this is on an individual basis and is negotiated when we write the listing contract with you.

Finally, on the subject of bonuses, you could offer it directly to the buyer. So, for example; "Seller will pay buyer's closing costs up to an amount of $5,000 for a full price offer".

Legal and Professional Charges; These will include the fees of the title company who closes the sale, your accountancy fees, as you will almost certainly need final accounts, courier fees and document fees. You should alow up to $2,000.

Title Insurance; As the seller, you are legally responsible for providing evidence of clear title to the buyer. This usually mean that you need to provide title insurance, which will cost you in the region of $1,200-$2,400. When we set up a listing contract with you, we can quote an exact figure. If you already have your own title insurance policy which was provided for you when you bought the property and it is less than three years old, you may be able to use it to agree a discount on the insurance you need to provide when you sell.

Property Taxes; The tax year runs from 1st January to 31st December and taxes are paid in arrears. So if you sell on 30th June, for example, you will be responsible for the first 6 months' taxes of the year you sell in. You will have to pay your share of the years' taxes to the title company in order to close the sale and this amount will then be credited to the buyer. In turn, at the end of the year, having recieved this credit, the entire responsibility for paying the taxes for the full year will then fall on the buyer.

Repair Costs; It is entirely likely that any buyer who makes an offer on your property will pay for a home inspection. The home inspection report will highlight any repairs that need to be completed by you, prior to closing. Usually, the sales contract will specify to what extent you will be liable, usually an amount of, say $1,000. If the repairs needed exceed the agreed amount, the buyer can pull out of the sale and have any deposit he has paid returned to him. Alternatively, you can re-negoiate the price or simply cover the cost of the repairs.

FIRPTA; This stands for "Foreign Investment Real Property Tax Act". So if you are an American owner, it doesn't matter to you. However, for any non-American property owners wanting to sell, it is very important to understand how this can affact you.

FIRPTA is a requirement of the IRS for withholding of 10% of the contract price at closing from the FOREIGN Seller of US real property. It is the BUYER who has to withhold this (or most realistically, the Buyer's agent (not the listing agent, but the title company or attorney handling the closing). If this 10% is not withheld at closing and it is later discovered that the Seller was in fact foreign and should have had the 10% withheld, then the IRS will come to the Buyer to pay this money (in addition to the title company). The 10% is initially withheld by the title company for up to one week, pending proof from the Seller's Accountant that an application has been made to the IRS for an exemption certificate. For this reason, any foreign Seller should make sure they start this process as soon as the listing is taken, to give their Accountant time to work on it. We have had this done in less than a week, but that was for an emergency rush measure, so don't do that unless it's an emergency.

If the title company gets this proof in time before closing, they will then hold onto the money until the IRS gives them authorisation to release it to the Seller (usually about 60-90 days). If they DON'T get this proof in time before closing, then they are obligated to remit this to the IRS, who will keep it for at least one year! It cannot be returned to the Seller by the IRS until the Seller sends in their following year's tax return, to prove they have no tax liability. You DON'T want that to happen!

In order for the title company to be able to withhold this 10% from the Seller (on behalf of the Buyer), both the Seller AND the Buyer must have an ITIN (Individual Taxpayer Identification Number) from the IRS. If you are unsure about this, please contact us for more information.

Pay off outstanding mortgage; It is wise to speak to your lender before putting your property on the market, for a number of reasons;

You obviously want to know what it will cost to settle the loan
If you have a 'low start' or 'deferred payment' mortgage, the capital outstanding could be much higher than the amount you originally borrowed
There may be penalty charges for early redemption of the loan. Often these can be avoided by giving the lender at least a month's notice of your intention to sell.

What about negative equity?

Sadly, in this time of falling prices, this can be a real problem. It is very important, right at the start of your listing contract, to know exactly what selling your house is likely to cost you. A $300,000 property will cost something in the region of $25,000 to sell and if you have a large mortgage to pay off and $30,000 FIRPTA held back from the sale, you could be pushed into a negative equity situation. The one consolation is that if your taxes are up to date and you are not making a huge capital gain on the sale, your FIRPTA payment will be returned to you in due course.

OK, you decide to list your property - What do you get for your money?

Firstly, we provide you with detailed research into your neighbourhood and provide examples of recent sales of similar properties to yours, before arriving at a price which we believe will be both realistic in the current market and the most beneficial to you. Ultimately, you decide what price you want to advertise the property at, but we will give you as much information and advice as possible to help you make an informed decision.

Sadly, in 2008, as mentioned, we are in the middle of a buyer's market, riding on the back of a huge fall in prices in central Florida. This will almost certainly mean that the price we will suggest that you list at will be much less than the price you expect. Property prices rose rapidly in 2004 and 2005 and then began to nose-dive. Property should always be seen as a long-term investment of 5-10 years. If you buy and then try to sell in just two years, the liklihood of making anything other than a loss is very remote! If you happen to be lucky, like those who bought in 2003 and then sold in 2005, then you can make a profit - in their case a huge profit, but if you bought in 2005, don't expect to make anything but a loss if you sell in 2008. This is the reality of investing in property that we must all accept in these circumstances.

Having said that, once we have agreed the best price to market at, we immediately search our own client banks to see if we have any potential buyers that are looking for a property that matches yours. We also advertise your property on the Multiple Listing System (MLS) which immediately puts it in front of not only thousands of Florida real estate agents, but also other potential buyers around the world, via the internet. There are several other different websites that we also advertise on, including the very popular 'Realtor.com'. We put a sale board outside your property (subject to the home owner association approval) and take a full range of external and internal photographs, plus flyers for passing buyers to collect. Recently we have also developed the unique idea of organising a five minute video 'walk-through' of the property, which is then featured on 'You Tube'. This makes it very easy for potential buyers to see exactly what they are getting.

We fit a state-of-the-art electronic lockbox to your property. Inside this we keep a set of keys to the property and these are accessible only to licensed Realtors who wish to show the property to their buyers. The lockbox records who views and at what time. The system is very effective and very secure.

We can arrange to show the property only at times to suit you, for example, if it is a short-term rental property, you may not wish it to be shown when you have guests staying in the house. Of course, this often means that you can become a victim of your own success. If your property rents out really well and you have 'back-to-back' guests, the chances of potential buyers getting in to see it are greatly reduced. Often property management companies 'ban' Realtors from viewing when guests are staying at the property. This may be something we have to work on with you.

We also inform all our introducing agents in the UK, that we have a new listing.

We pick up all incidental costs such as having a spare key cut, photographs, sale board, video, accompanied viewing, etc.

Finally, we can run an "Open House" sale for you, where we spend a day in your property - usually on a Saturday - and invite buyers to come and browse at their leisure.

All of this is included in the agreed commission amount and we only charge if we sell. If there is no sale, there is no fee!

Look at the “Listings” section of this website to see examples of property currently for sale. If you want to know more, please contact us on villasinthesun@hotmail.com and let us know how you want to proceed. We can then talk about actually pricing your home and timescales for selling.

Looking forward to hearing from you.