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If you’re selling a home, you’ll want to know how much it’s going to cost to close the deal. That way, you can make a plan for buying your next house.

In addition to what’s needed to pay off your mortgage, it’s common to spend about 10% to 15% of the home price in selling costs. But some things are optional or negotiable.

Cost of selling a house: Most common expenses

Here are some of the typical expenses you can expect to pay when selling a house.

Real estate agent commissions

Editor’s Note: This article has been updated to reflect the outcome of a legal settlement involving commissions paid to real estate agents representing home buyers. Starting in August 2024, home buyers in most markets must sign agreements with their agents before touring homes, and buyers will set their agents’ commissions through negotiation. See how this will affect home sellers and home buyers.

The listing agent and the buyer’s agent will be paid a percentage of the sale in commission, which could either be split between yourself and the buyer or could be paid entirely by you. This rate is negotiable, and you may set the sale price a bit higher to offset the cost.

The commission is likely the biggest expense you’ll pay, so when interviewing listing agents, ask specifically what they charge. Make sure you agree on commission terms in writing.

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Taxes and neighborhood fees

Taxes vary widely by area. Ask your real estate agent what to budget for your situation.

Property tax: You’ll likely owe a prorated share of property taxes when you sell your home. The amount could be close to zero if you’ve recently paid taxes, or several thousand dollars if the due date is around the corner.

Real estate transfer tax: Some states or local jurisdictions have a transfer tax, which is charged when the property changes ownership. (This is different from a title filing fee, which is a separate administrative fee.) The amount depends on your location and the property value, and depending on local laws, it could be paid by the buyer, seller or both.

Capital gains taxes: You may also face capital gains taxes if the profit you make from selling your home is more than $250,000 ($500,000 for married couples on joint tax returns).

HOA fees: If your neighborhood has a homeowners association, expect to pay prorated membership fees. You may also need to pay an HOA transfer fee.

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Min. down payment 

0%On VA loans, NBKC offers down payments as low as 0%.

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NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

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NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

Min. down payment 

3.5%First-time home buyers may qualify for 3% down mortgages at Rocket.

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NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

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Min. down payment 

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Title insurance for the buyer

Buyers also purchase a title policy if they apply for a mortgage, but that policy protects only the lender. In some areas, the seller pays for a separate policy for the new homeowner. The average cost is about $1,000, according to the National Association of Realtors.

The title company will run a title search on the property during the sale process. If the search reveals a lien on your home, you’ll need to settle it before you can sell the house.

Your current mortgage payoff

It’s no surprise you’ll need to pay off your mortgage when you sell your home. But the payoff amount is probably different from the balance due listed on your last mortgage statement, because of interest charges. You’ll want to know the payoff amount.

If your mortgage has a prepayment penalty, that will be added to the amount due. The money from the sale will apply toward the remaining balance on your mortgage. If the selling price of your house isn’t enough to cover the full balance, you’ll have to pay the difference.

Home repairs

The buyer will probably order a home inspection before closing. If the report reveals problems, you may be asked to pay for repairs.

Moving costs

Whether you buy boxes, pack and move them yourself or hire a company, you’ll want to budget money for the move.

So what’s your home really worth?

NerdWallet can show you what your home is worth and update you on changes over time.

Optional costs to sell a house

Depending on how competitive your local market is, it can be smart to pay for extra services to attract potential buyers. They’re not always necessary, but they could help your home stand out.

Home warranty

To ease potential worries about buying an older home, sellers can offer a home warranty that would cover most of the repair costs if a major system broke soon after the home was sold. One year of coverage often costs between a few hundred and $1,000, although some plans can cost more depending on the coverage offered.

Home staging

It’s wise to remove clutter and give your home a good cleaning before you put it on the market. But your agent may suggest going a step further and hiring a home stager to make your home more visually appealing.

Stagers may rearrange furniture, change the interior design and even rent furniture to display while your house is for sale. The median cost to hire a professional home staging service is $600, according to 2023 data from the National Association of Realtors.

Portion of buyer’s closing costs

Buyers are usually responsible for mortgage fees, home inspections and appraisal expenses, which can add up to about 2% to 6% of the selling price. If you’re in a slow market, offering to pay some of those closing costs for the buyer could help seal the deal.

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NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

5.0

NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

Min. down payment 

0%On VA loans, NBKC offers down payments as low as 0%.

5.0

NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

5.0

NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

Min. down payment 

3.5%First-time home buyers may qualify for 3% down mortgages at Rocket.

4.5

NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

4.5

NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

Min. down payment 

3%Better offers 3% down payments on conventional loans.

5.0

NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

5.0

NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

Min. down payment 

3%Guaranteed Rate offers conventional loans with as little as 3% down.

ADVERTISEMENT

Mortgage loans from our partners

Best Mortgage LendersFirst-time BuyerRefinanceHELOCHome Equity Loans

5.0

NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

5.0

NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

Min. down payment 

0%On VA loans, NBKC offers down payments as low as 0%.

5.0

NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

5.0

NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

Min. down payment 

3.5%First-time home buyers may qualify for 3% down mortgages at Rocket.

4.5

NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

4.5

NerdWallet rating 

NerdWallet’s ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

Min. down payment 

3%Better offers 3% down payments on conventional loans.



This article was originally published by a
www.nerdwallet.com . Read the
Original article here. .


Editor’s Note: This article has been updated to reflect the outcome of a legal settlement involving commissions paid to real estate agents representing home buyers. Starting in August 2024, home buyers in most markets must sign agreements with their agents before touring homes, and buyers will set their agents’ commissions through negotiation. See how this will affect home sellers and home buyers.

If you’re wondering if now is a good time to buy a house, ask this instead: Is it a good time in my life to buy a house?

Housing market trends give important context, so we’ll look at those numbers here. But ultimately, whether this is a good time to buy a house depends on your financial situation, life goals and readiness to become a homeowner.

Let’s explore both aspects of the homebuying journey: the housing market and your own readiness to buy a home.

Looking to Buy or Sell a Home?

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How’s the housing market right now?

These are some factors affecting buyers in today’s market.

Mortgage rates: At their lowest since February 2023

The interest rate on a 30-year fixed-rate mortgage averaged 6.28% annual percentage rate (APR) for the week ending Aug. 15, down one basis point from the previous week and down 90 basis points from a year ago, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of 1%.

Average weekly mortgage rates

Averages are for the week ending Aug. 15, 2024, according to rates provided to NerdWallet by Zillow.

Buyers got some welcome relief this month, when the 30-year fixed-rate mortgage dropped to its lowest average rate since February 2023. In general, mortgage rates have remained stubbornly high throughout the first half of 2024. If inflation gets under control later in 2024, as many experts predict, mortgage rates are likely to continue a modest decline.

Did you know…

Higher rates shrink buying power because they make home loans more expensive. For example: Let’s say you make a 20% down payment on a $350,000 house. With a 6.8% mortgage rate, your monthly payment would be $1,825 (not including home insurance and property taxes). With a 5% mortgage rate, the monthly payment would be $1,503 — $322 lower.

You can’t influence average rates, so focus on the things you can control:

Shop around for the best deal. Especially given today’s higher rates, buyers can save $600 to $1,200 per year by applying for loans from multiple mortgage lenders, according to a February 2023 study by Freddie Mac, the government-sponsored entity that buys conforming loans from mortgage lenders.

Lock in your rate. After getting approved for a home loan, consider locking in the mortgage rate until the loan closes to protect against further rate increases.

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Inflation and the economy: Waiting for the Fed to cut rates

The Federal Reserve, the nation’s central bank, guides the economy with two goals: encouraging job growth and keeping inflation under control. The Fed doesn’t directly set mortgage rates. However, it does set the federal funds rate, which influences interest rates for loans including mortgages.

After a series of 11 increases to the federal funds rate in 2022-2023, the Fed has kept things steady since last September. A rate cut of even a fraction of a percentage point would offer buyers more relief.

With inflation slowly easing, the Fed could consider cutting rates at its next meeting on Sept. 17-18, 2024.

Supply of homes for sale: Still limited (but getting better)

A shortage of homes for sale has made this a tough era for buyers. But inventory is finally improving: In June, the months’ supply of homes for sale reached its highest level in more than four years.

In June, there was a 4.1-month supply of homes on the market nationwide, according to the National Association of Realtors (NAR), meaning it would take a little more than four months at the current pace for all the properties to sell. That’s an improvement over last month (3.7 months) and last year (3.1 months). The market hasn’t seen inventory above a four-month supply since May 2020, when supply was 4.5 months.

Did you know…

In a balanced market, the supply of homes for sale would last six months. Supply less than that is considered a seller’s market. More than a six-month supply is considered a buyer’s market.

“We’re seeing a slow shift from a seller’s market to a buyer’s market,” NAR Chief Economist Lawrence Yun said in a news release. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”

Home prices: Higher than ever after a 12-month climb

The national median price for existing homes sold in June was $426,900, up 4.1% from June 2023, according to the NAR. That’s the highest median price ever recorded by NAR, beating last month’s record high and following 12 straight months of year-over-year price increases.

Under the crunch of high prices, sales of existing homes — properties that were owned and occupied before going on the market — dropped 5.4% from May to June, according to the NAR. Sales are also down 5.4% compared to June 2023, when the median existing-home sales price was about $410,000.

All four U.S. regions — Midwest, Northeast, South and West — saw year-over-year price increases in June. Here’s a regional look at median prices and year-over-year price changes:

Midwest: $327,100, up 5.5%.

Northeast: $521,500, up 9.7%.

South: $373,000, up 1.7%.

No one can predict exactly what the market will do next. But in a news release, Yun paints an optimistic picture that high prices might be topping out now that inventory is improving.

“Even as the median home price reached a new record high, further large accelerations are unlikely,” Yun said. “Supply and demand dynamics are nearing a balanced market condition. The month’s supply of inventory reached its highest level in more than four years.”

Competition: Steady, but less intense than last year

Some good news: Compared to last summer, competition has cooled off. The June 2024 Realtors Confidence Index, a survey of the NAR’s members, highlights these key market indicators year over year:

Houses for sale are getting fewer offers. A home listed for sale received an average 2.9 offers in June, down from 3.5 offers per home last year.

Fewer homes are selling above list price. In June, 29% of homes sold above listing price, down from 33% a year ago. 

Homes are staying on the market longer. Houses stayed on the market for a median 22 days in June — four days longer than June 2023, when the median was 18 days. Last month, 65% of homes sold in less than a month. A year ago, that figure was 76%.

Overall, though, demand still outpaces supply. This is hardly a mellow market: Good homes sell quickly, and buyers should still expect competition out there. If you’re ready to buy, get a mortgage preapproval so you’re prepared to make a strong offer. Once mortgage rates drop, competition will only go up. There’s no time like the present to start shopping.

Homebuying readiness: Should I buy a house now or wait?

Ask yourself these questions to explore whether you’re ready to buy a home.

Are you prepared to put down roots?

Think about your life goals, relationships and interests. How long can you see yourself living in this location?

Ideally, you’d want to remain in the home long enough for rising property values and your equity to exceed the costs of buying and selling, including real estate commissions and mortgage closing costs. That will typically take several years.

You could also be subject to capital gains taxes if the home appreciates in value and you sell it after less than two years.

How’s your job security?

A mortgage is a big commitment and can become a stressful burden after a job loss, so it’s not a good time to buy a home if you think you’ll get laid off.

Wait until your employment is stable before thinking about buying a house.

Are you financially prepared?

Here are the three main ingredients to evaluate.

Savings

You’ll need money for a down payment and mortgage closing costs as well as for moving and other expenses after you buy the home. The down payment requirements vary by the type of mortgage and the lender. The more you put down, the lower your monthly mortgage payment.

The typical down payment for first-time buyers is 8% and for repeat buyers is 19%, according to an NAR survey of home buyers who purchased a primary residence from July 2022 through June 2023.

Credit

Lenders generally offer the best mortgage rates and terms to borrowers with credit scores of 740 and above, although you can qualify for a mortgage with a score in the 600s. The options are much slimmer, and loan costs can be higher for borrowers with a score in the 500s.

If your credit is marginal, it might make sense to postpone buying a house and use the time to work on building your credit.

The average FICO credit score for closed mortgage loans to purchase homes in the past 30 days was 735, according to mortgage data provider ICE Mortgage Technology.

Debt

Lenders look at your debt-to-income ratio (DTI) to help determine whether you qualify for a mortgage. Your DTI is the percentage of your monthly gross income that goes toward monthly debt payments, including housing costs, as well as car, student loan, credit card and other debt obligations. Lenders like to see a DTI under 36%, although it’s possible to qualify with a higher ratio. The lower your DTI, the better your chances of qualifying for a mortgage and getting offered the lowest available rate.

The average DTI for purchase mortgages in the past 30 days was 40%, according to ICE Mortgage Technology.

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This article was originally published by a www.nerdwallet.com . Read the Original article here. .


KSHB 41 reporter Grant Stephens covers issues connected to access to housing and rent costs. Share your story idea with Grant.

There are big changes coming to the way you buy or sell a home.

These changes stem from a series of lawsuits intended to make the home buying process more transparent.

The changes take effect August 17th.

An agent working with a buyer will have to work out an agreement before the prospective buyer and real estate agent look at a property together.

KSHB 41 News staff

Home in Kansas City area

“When a real estate agent says, ‘Hey, starting August 17th, you have to sign this agreement,’ they’re telling you the truth,” said Holden Lewis with NerdWallet.

You may be familiar with the standard five to six percent commission rate you’d have to pay in the past.

It’s split between buyer’s and seller’s agents and is often baked into the total cost of the home.

The changes mean there’s now an extra layer of negotiation that could change that standardized fee.

“It’s gonna specify how much you’re gonna pay that agent,” Lewis said.

Realtors like Kathleen Spiking with the Rob Ellerman Team say it might change how contracts are written and how they’re paid.

KSHB 41 News staff

Kathleen Spiking

“They’re training us on what’s going on, what’s does this look like, how does it appear in a contract,” Spiking said.

But since she’s always been upfront with costs, it won’t change the day-to-day.

“Personally, for me, it doesn’t affect the way that I run my business,” she said. “I still have communication up front with all of my clients, whether they’re buyers or sellers, and I think maybe for people it would be further and more thorough communication at the beginning and during the process of buying a home,” she said.





This article was originally published by a www.kshb.com . Read the Original article here. .


If you sell your home after the middle of August, cheers: You could end up pocketing the money that previously would have gone to the buyer’s agent.

But before you celebrate, consider the downside of waiting until late summer to list your home for sale: House prices tend to fall after August. The price drop might surpass the money you save on commission.

New policies governing real estate commissions are set to go into effect Aug. 17 as a result of the settlement of an antitrust lawsuit. The amended policies give home sellers more room to negotiate what to do about the buyer’s commission — whether they want to use it to induce competitive bids or keep it to themselves entirely.

The choices complicate this season more than usual, for both buyers and sellers. Here’s what to know to help you and your agent come up with the best strategy for you.

What, exactly, is changing?

Starting Aug. 17, sellers will no longer set the commissions for real estate agents who represent buyers. Buyers will decide how much their agents will be paid. Even when sellers are willing to pay some or all of the commission for the buyer’s agent, the amount will no longer appear on the multiple listing service.

For decades, and up to Aug. 17, MLS listings have been required to advertise how much commission the seller is offering to buyer’s agents. The information wasn’t visible to home buyers but could be viewed in agent-only fields of the MLS.

When sellers set commissions for buyer’s agents, they’re sometimes advised that offering a low commission will attract fewer buyer’s agents — and therefore fewer competing offers. The plaintiffs in the antitrust suit argued that the policy of requiring commission info on the MLS was designed to discourage them from negotiating lower commissions for buyer’s agents.

Can sellers start offering 0% to buyer’s agents today?

Technically, sellers have always had the option of offering zero or minimal commission to the buyer’s agent. But most sellers have offered such commissions to motivate buyer’s agents.

The money may come directly out of the seller’s pocket, as has been the norm.

The money may come directly out of the buyer’s pocket.

The buyer and seller may split the payment.

The buyer may pay indirectly, by adding their agent’s commission to the price of the house when they make an offer.

Here’s an example of how an indirect payment might work for a buyer who is paying a 3% commission. The buyer finds a house costing $400,000. The 3% commission is $12,000. The buyer offers $412,000 and asks the seller to transfer $12,000 to the buyer’s agent at closing.

Keep in mind that sellers, having equity, tend to have more access to cash than first-time home buyers, who accounted for 33% of buyers in April. A seller who’s willing to pay all or some of the buyer’s commission may end up with more offers, and a higher final price, than one who flatly takes that commission off the table.

How much money could sellers keep, though?

As a home seller, you stand to save thousands of dollars on commissions if the buyer pays their agent directly or indirectly.

Let’s say the agents in your town typically collect 2.5% on each side of the transaction, and you sell your house for $400,000. Each agent earns $10,000. If you pay both agents, you’ll shell out $20,000 and end up with $380,000.

But if the buyer pays their agent, you would pay your agent $10,000 and walk away with $390,000. That’s $10,000 more.

On the other hand, buyers might request bigger closing cost credits, subtracting from the seller’s bottom line, Chuck Vander Stelt, a real estate agent in Valparaiso, Indiana, said in an email. Or buyers might offer less because they will bear the expense of paying their own agents.

Even after Aug. 17, sellers might keep offering commissions to buyer’s agents as motivation, Vander Stelt added. These offers could remain standard in many markets, multiple agents said. Offering commissions to buyer’s agents will still be permissible under the new policies, but those offers will no longer appear on the MLS. Listing agents can communicate the information on brokerage websites, or in phone calls, emails and texts.

What would be the cost of waiting?

You might be tempted to keep your home off the market until the new policy goes into effect. But waiting might not be a wise move, because it would mean sitting out homebuying season.

Home prices peak from May through August, then drop off. In 2023, the median existing home cost $410,100 in June, $405,600 in July, $404,200 in August — and $392,700 in September, according to the National Association of Realtors. If you list your house after mid-August, you probably won’t close until October or later, when prices are even lower.

With house prices peaking in summer, you might come out ahead by selling during the busiest time of the year, even if you end up paying the buyer’s agent’s commission.

“I don’t really have anybody holding off until after August to list their house because they want to save a couple bucks,” says Michelle Doherty, an agent in northern Virginia with RLAH Real Estate. She says her clients will be ready to sell in June or July, “depending on how things progress with prepping the house.”

Can I negotiate the listing agent’s commission too?

You might save money if you don’t pay the buyer’s agent’s commission. But what about the commission that you pay the listing agent for selling your home? You might not see an immediate reduction. If a cut in commissions from 3% to 2% is your hope, you’ll probably mope.

“First of all, nothing’s going to change quickly, OK?” says Stephen Brobeck, senior fellow for the Consumer Federation of America. “The industry will resist, and consumers don’t really focus on this much.”

Vander Stelt said that he sees headlines that proclaim “the end of the 6% commission.” That’s a mistaken belief, he said. “Overall, the average commission costs per transaction on a percentage is likely to come down over the coming years,” he said. But not instantly.

What if I list before Aug. 17 but sell after?

Months can pass between the day you put your home on the market and the day you hand over the house keys at closing. What if the Aug. 17 policy change happens in the middle of this period? The National Association of Realtors provides guidance for two scenarios:

Your home’s MLS listing offers to pay the buyer’s agent’s commission, and you sign the contract accepting the purchase offer before Aug. 17: You’ll pay the commission, even if the closing occurs on Aug. 17 or after.

Your home’s MLS listing offers to pay the buyer’s agent’s commission. But in accordance with the new policy, that offer is removed from the MLS on Aug. 17. Sometime after that date, you accept the purchase offer: That defunct commission offer on the MLS is no longer valid. You and the buyer will negotiate how to take care of the buyer’s agent’s commission.

When you put up your home for sale, you’ll sign a listing agreement with your agent. NAR says that listing agreement might have to be amended if it says that an offer to pay the buyer’s agent must be made “on the MLS.” As of Aug. 17, that clause in the listing agreement will conflict with the new policy. Your agent might ask you to sign an amended listing agreement before that date.



This article was originally published by a www.nerdwallet.com . Read the Original article here. .

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