With the advancement in technology and information overload on the internet, there are some myths about the real estate transaction process.
Most often, the myths end up being about costs associated with selling or purchasing a home!
So, let take it the basic and keep it SIMPLE!
Are you considering selling your home?
Here are costs associated with selling:
- Real Estate Commission: This is the most significant cost for the seller. In the State of Connecticut, commission is negotiable and it all depends on your motivation to sell. The commission compensates both your listing agent representing your home and the buyer’s agent bringing in the ready and qualified buyers.
- Closing Costs: Typically when selling a home, the seller is responsible for the state and local conveyance tax and attorney’s fees. To be conservative, be prepared to pay 1% of the purchase price. (Example: Purchase Price $100,000/1%= $1,000)
- Any and all liens: If your home has a lien, the seller will need to satisfy that lien at closing before the property is conveyed to the new owner. The liens will be paid out of the net proceeds.
Are you considering purchasing a home?
Here are the costs associated with buying:
- Mortgage: The mortgage approval process and qualification process does not have to be complicated if you are working with a trusted and qualified agent. The lender you choose will play one of the biggest roles in the purchasing process as it will determine your monthly mortgage payment. Your monthly mortgage payment will include your principle amount borrowed, your interest rate, taxes, and insurance.
- Down payment: The myth that purchasers need to put down 20% as a down payment is bologna. I repeat, YOU DO NOT NEED TO PUT DOWN 20% TO PURCHASE A HOME! However, your down payment will dictate your monthly mortgage payment and it all depends on the kind of loan you qualify for. There are loans that allow down payments as low as 3%. Be sure to be guided by a trusted and qualified lender who will walk you through all the scenarios so you can make a decision that best suits you and your family.
- Appraisal Fee: The appraisal fee pays for a licensed professional to determine what the home is worth before a lender will extend a mortgage commitment. Estimating the market value of a home will typically range from $300-$450 or more for a larger-sized home.
- Home Inspections: Purchasers are always responsible for the home inspection. The inspection can include the physical home inspection, pest inspection, radon concentration inspection, water potability/mineral & chemical analysis, private well water system inspection, and/or septic inspection. The home and it’s features will dictate which ones you will be testing for. Furthermore, the size of the home will determine the cost. On average a 2,000 square feet home needing all of the above items listed will cost you around $800-$1,000.
- Closing Costs: Typically the purchaser pays for most of the closing costs in a real estate transaction. The fee may include: loan origination fees, discount points, title search, title insurance, surveys, taxes, deed recording fees, property taxes, and homeowner’s insurance and attorney fees. To be conservative, be prepared to pay 3% of the purchase price to cover the closing costs. ($100,000/3%) $3,000.
These numbers are a great starting point!
Can the costs fluctuate? Absolutely! But, now you can be better informed to make a move, if and when you decide to!
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