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What will it cost to sell?
The cost of selling your property is made up of a number of charges which are summarised in the closing statement prepared by the title company.
While selling commissions are a negotiable matter, generally speaking, full service listing representation will cost around 6%, with 3% going to the Listing Broker and 3% going to the Selling Broker. We may have negotiated a lower rate of, say 5%, though.
The other costs involved will be a State Documentary Stamp Tax on the Deed, which equals 70 cents for every $100 of selling price. For example, selling your property for $250,000 will incur a documentary stamp tax of $1,750.
There will also be a charge for title insurance, usually around .0067 of the selling price (example $1,675 on the $250,000 property).
In addition, the Seller will usually split the cost of the closing agent's fee with the Buyer, which can amount to approximately $150 each.
The only other costs will be prorations of any unpaid homeowner association fees and property taxes which may be due, during the ownership of the Seller. If you sell at the end of June, for example, you will be liable for the first half of the year’s taxes, as they are paid in arrears, from 1st January- 31st December. e.g., if the annual taxes are $3,000.00, you will need to credit the buyer with $1,500.00 at closing, as he will be billed for the whole year, in November. If you have a US mortgage, your lender will have been collecting this money from you on a monthly basis, and will be holding it in an escrow account, so it will be returned to you at closing, to cover the cost of the credit to the buyer.
The Seller may also have negotiated with the Buyer to pay any repair costs, as a result of a home inspection which the Buyer may have conducted, but usually subject to a predetermined cap, typically $500-$1,000.
Finally, the Seller will have to pay off any mortgage or other encumbrances at closing.
The only other issues to think about are:
1) If you are selling an investment property, you may be liable in the US for capital gains tax, which is a tax on the difference between the selling price (less costs) and the purchase price (plus costs), less any capital additions made during ownership, plus any recapture on capital cost recovery taken during ownership.
2) If you are a foreign national, you may be liable for a FIRPTA withholding of 10% of the sale price, which is usually refunded to you within two or three months. Both of these issues will require the services of a competent tax advisor here in the US. We will be happy to recommend one.
See “Useful Links” for details of tax advisers and title companies
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