Yes, it’s a heavily favored seller’s market right now. And it may be tempting you to even consider the idea of selling your home, especially if it has appreciated significantly. In today’s world of the internet, you can easily look up the estimated value of your home or ask a local agent for a more accurate number. However, that doesn’t directly translate to what your estimated profit might be in the end. If you’re interested in finding out how you can estimate this, take a look at my Estimated Home Seller Profits breakdown sheet below. Please keep in mind that these are just some of the common costs that you may be charged. Some may apply, some not, or you may incur other additional costs not mentioned. Lastly, this is for educational purposes only, so actual costs will vary. If you would like a copy of this breakdown sheet in Excel format so that you can play around with your own numbers, send me an email at lorvang@gmail.com with “Estimated Home Seller Profits Sheet” in the subject line and I will email you a copy.
Here’s a quick explanation of each of these items.
MLS Listing Fee: fee for listing your home on the MLS charged by the broker. This fee varies between brokerages and is commonly collected upfront at time of signing the listing contract.
Professional Photographer: cost for hiring professional photography. Well worth the cost to do this and of course pricing will vary depending on the photographer chosen and package details. This fee is also normally collected upfront.
Home Staging: cost for hiring a home stager, if required. This cost can be a per month cost, as it depends on how long you will be using their furniture.
Agent(s) Commission: the agreed commission paid out to the listing brokerage upon completion of the sale of your home. This commission can be split between the buyer’s agent and your listing agent based on whatever terms are agreed to.
Broker Admin Fee: fee charged by the brokerage to manage the sales transaction, documentation review, and ongoing file keeping as required by law. This is sometimes called a transaction fee as well. This fee is charged at closing and varies between brokerages.
Title Company Costs: work performed by the title company such as a title search report to ensure your home has a clean title that is free of liens and other encumbrances and title insurance policy that protects your home’s title in the case that anything does come up in the future. This cost is rolled into closing costs due at the time of closing.
Special Assessment Fee: this is a local city fee that is charged at the time of sale. If the city is doing a major utility project near your home, there could be a significant share of that project’s cost due. This is charged at closing as part of the closing costs.
Closing Fee: title company’s charge for preparing the closing documents and handling the documents on your behalf. This is charged at closing as part of the closing costs.
Recording Fee: fee charged by your local city for recording the new deed. This is charged at closing as part of the closing costs.
WI State Transfer Fee: state fee for transferring properties. WI has a transfer fee of 0.3% of the purchase price. This is charged at closing as part of the closing costs.
Gap Insurance: Title insurance that protects the “gap” when owners are being changed on the title of the property. This is to protect in a situation where someone were to file a claim against the property during that transition time, for example, possibly a contractor lien is filed during that time for work that wasn’t paid for. This is charged at closing as part of the closing costs.
Seller Credit Towards Buyer’s Closing Costs: any agreed closing cost credits that would be given to Buyer at time of closing. For example, maybe you as the seller chooses to offer closing credit for the replacement of an aging furnace that still works but may need to be replaced in the next year or two.
Home Warranty: if you as the seller choose to offer a home warranty as a way to incentivize potential buyers, you would purchase a warranty policy for the buyer. This is charged at closing.
Property Taxes: typically property taxes are pro-rated up to the date of closing in the current calendar year. However, it can be different based on whatever terms are agreed to. Your share of the property taxes will be deducted from your sales proceeds at closing.
Utilities: utility bills that are tied to the property such as water, sewer, and trash are also pro-rated up to the date of closing. Your share of the utilities will be deducted from your sales proceeds at closing.
Mortgage Balance: your loan balance payoff amount will be deducted from your sales proceeds at closing to determine your final take home profit. For estimation purposes, you can pull up your most recent mortgage statement and use your current balance remaining.
Final thoughts. The breakdown estimation does not include other potential items that could arise such as any outstanding property tax, utility bills, or payoff of liens on your home that could tie up your transaction if any should exist. Reviewing the total estimated costs without factoring in the mortgage balance, the total costs are about 9% of the sales price. So if you just wanted a quick and rough idea of your profit, you could estimate your sales cost at 10% of the sales price, and then subtract out your remaining mortgage balance and that would be your estimated net profit. I hope this post helps provide you with more insight and information on the common sales cost items when selling a home and how you can calculate your own potential sales profits. Contact me, if you have any questions or if you would like me to email you a copy of the spreadsheet.