We bought a house three years ago and sold it recently. Here are the numbers for what we had to bring to both closings. These numbers are intended to be an example only, in a low recording/transfer-tax jurisdiction, to demonstrate what you're getting into when you buy a house (because realistically, you will have to sell it one day).
When we bought, the house listed for $162,000 and we bought for $158,000. The sellers gave us $1,000 at closing for repairs.
- Rebating realtor: 1% (-$1,580)
- Earnest money: $1,700 (included in down payment, $0)
- Home inspection: $350 (paid credit card prior to closing, $350)
- Survey: $150 ($150)
- Appraisal. We didn't have one, but $500 is standard, rolled into closing costs, since the lender usually wants it.
- Down Payment. We couldn't get a mortgage at a reasonable rate of interest, but it's my understanding that 20% is standard.
- Homeowner's. We paid $600.
- Closing Costs. $350 between closing company and recording costs.
- Tax. We were refunded for pro-rated current-year taxes, but property taxes went up 2.6% that year, so we wound up paying $10 more than that refund for the fraction of the year the property was held by the previous owners. In other words, in net, the property tax liability transfer cost us $10.
So the price was $1,120 less than the contracted sales price. Most people will have a lender and spend more than us (title insurance, appraisal, etc.). We paid $3290 to fix some of the inspection items, so including repairs, we paid $2,170 more than the contracted sales price (retrospectively, we got somewhat shafted on the inspection negotiation, though I suspect we were pretty close to the sellers’ bottom-line).
We sold the house for $210,000 less $3,500 at closing. We gave the buyers $5,000 for repairs (it was a bit high, but we didn’t want to relist the house).
- Preparation costs: $3,000 (cleaning supplies, new paint, and new carpet)
- Realtor (3% for buyer agent, the rest to ours): $10,500
- Seller-paid Buyer prepaids & closing costs. $3,500
- Seller-paid closing costs. $1,200
- Tax. For technical reasons, we saved half of our 2017-pay-2018 taxes for the slightly over half of the year we were in the house. Our buyer was quite aware of this credit, as they needed it to close, so we could have saved it here or in the closing cost reduction. (-$900)
Total net to us: $187,700
In total, the two transactions cost us $23,420 (excluding buy-time repairs but including sell-time repairs), or 12.7% of the average transaction price. Another way to look at the numbers is to consider the closing cost credits and inspection payments as reductions in transaction price, in which case the total cost was $15,920, or 8.9%.
Some thoughts:
- It's crazy to put down less than 10%, because if the market dips just a bit, you'll be writing a check to sell the house, or in a foreclosure situation. That, and PMI isn't cheap.
- Selling a house is a lot harder than buying one. Preparing the place, keeping it clean for showings, and managing asking price, showings, and offers is a lot of work.
- The market is ripe for disruption in the real estate agent space (see, for example, Redfin), but a good agent will guide you through the bumps of selling.
- Our jurisdiction is cheap (both the houses and the government charges), yet selling a house was quite expensive. The agent fees I knew about and planned for, but closing costs, inspection contingencies, etc. were pretty expensive.
I'm not including the buyers' financials (even though they're on the closing statement), but I'll make a few notes.
- Failure to shop their mortgage provider cost them around $2000 in closing costs alone. I don't know what their rates looked like, but these were costs and not points.
- Failure to get a rebating realtor cost them another $3000 easily.
- Putting down a small percentage will cost them truckloads of PMI.
TL;DR Selling a house is hard, and expensive.
Submitted July 18, 2017 at 01:22PM by SeahawksBandwagoner http://ift.tt/2uFB3BE
