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Closing Costs for Sellers

Whether you’re the seller or the buyer, there are fees attached to the closing of a home sale. As a seller, you may be unprepared for the costs associated on your end that are detracted from your overall profit, especially since the closing costs are often higher for sellers. Overall, the closing costs for sellers can range from 6% to 10% share of the earnings of the home sale. A few days before the closing, all parties will receive a closing disclosure that will itemize the different costs. Here are a few things that contribute to a seller’s closing costs.

1. Agent Commissions

If you work with an agent, their commission gets taken out during the closing costs. For a seller, it is deducted from the total sale of their home. The seller is usually responsible for covering the commission for their listing agent, as well as the buyer’s agent. This can range from 4-6% of the total sale.

The commission helps cover the agent’s time spent helping with everything from open houses to showings, as well as the hours spent on paperwork and price negotiation. While some may see FSBO as a route to help save money, you run the risk of not earning the highest possible value for your home, as well as getting bogged down by complex paperwork that, if done wrong, can lead to penalties or legal fees.

2. Title Insurance

Title insurance is a protection for the new owner of your home, ensuring they have rights to the property (physically or financially in the worst case scenario) if someone else claims to have rights to the property from a time prior to the sale. While this is not often an issue, claims can be made from previous creditors or the government. The seller is often expected to pay for the insurance.

3. Taxes and Fees

As with any other purchase, there are taxes tied to the sale of your property. The first tax fee is the government transfer tax, which covers the cost of transferring the title from one party to another. The cost can vary by city and state. For example, costs in California are much higher than in Iowa.

Another thing to be aware of is the prorated property taxes and HOA fees. Your property taxes will be prorated up to the day of the closing and are often paid on closing day to ensure they get covered. The buyer will then cover the property taxes starting the day of the closing. Any HOA transfer fees depend on the neighborhood’s rules, however, if you have any outstanding fees, those will need to be covered before closing.

4. Additional Costs

A few other costs to consider when closing the sale of your house. Depending on the inspection, you may have to pay for certain repairs or offer the buyer a credit. This can range from minor to major costs. While you can always reject the deal, whatever is discovered, will have to be disclosed to the next buyers and can lead to the value of your home decreasing while prolonging the sale of your home.

Speaking of repairs, even though this isn’t associated with closing costs, do consider the cost that goes into any updates your home may need before selling. While this can help the total price earned, you want to ensure you actually receive a return on the investment you make through repairs. I often encourage prospective clients to consult with an agent (like me) to help make suggestions for high-impact fixes.

Blank Real Estate Sign in Front of Beautiful New House.

4 Common Mistakes People Make When Selling Their Home

While there are many different reasons you may be selling your home, there is one binding truth for all sellers: you want to secure the highest value possible. Unfortunately, due to inexperience or time limitations, sellers without the proper guidance can make many mistakes that lead to a decreased value for their property. Here are the top four common mistakes people make when listing their home on the market and how to avoid them.

Thinking they can do it themselves

Before you commit to listing your home as For Sale By Owner, beware of the many components that make the home selling process difficult. Not only is selling emotionally draining, but you open yourself up to legal liabilities by doing it on your own. The amount of paperwork that must be done correctly can be overwhelming and confusing to someone without experience. Beyond that, you lose potential buyers since your listing won’t be included in many of the large networks realtors are connected to. Not to mention that many realtors won’t show their clients a home listed by the owner. A realtor provides sellers with expert guidance, price negotiation skills, and increased marketing of your property, which will help you secure the highest dollar.

2. Ignoring their curb appeal (or lack thereof)

The first impression of your home is crucial for securing a qualified buyer. Home sellers often take pains to ensure the interior of their home is perfectly designed and stylized, often overlooking the true first impression: the landscaping. Ensuring that your home’s exterior cosmetics are immaculate is key to conveying the quality of your home. This means a well-manicured lawn, exterior repairs, like fixing a broken shutter or porch railing and welcoming, but simple decor can go a long way.

3. Not decluttering or depersonalizing their home

It doesn’t matter how great the market is for sellers. If your home is cluttered, you will receive low-budget offers or, worse, no offers. Clutter and mess detract from the overall value of your home because it gives it the appearance of disrepair. It can also make the space feel smaller than it is. With my clients, I always ensure that the room is appropriately set for a showing and can help stage your home.

Along with decluttering, so often, people forget to depersonalize their homes. Yes, that means taking down pictures of your family and removing nameplates that may be hanging in your kids’ bedroom. While it may seem silly, buyers want to imagine their life in your home, not yours.

4.Ignoring cosmetic fixes

Much like ensuring the exterior of your home is presentable, taking time to fix any interior cosmetic damage is equally as important. Sellers should correct anything visibly broken or peeling because when buyers walk through, they see each of those things as extra dollar signs, leading to a lower offer. Some smaller projects to consider include painting walls, updating your flooring, or upgrading your lighting.

Ultimately, there isn’t a magic formula for selling your home, but avoiding these common mistakes can help you sell your home faster and at a higher price without too much frustration.

When it’s a Seller’s Market, Do I Need to Stage My Home?

When discussing staging, a frequent question I get from clients is, “If we’re in a seller’s market, does staging matter?” Our answer is always that it depends on the following factors: the original appearance of a home, the desire to increase value, and if the house will be empty during the home showing process.

Reason to Still Stage Your Home

In 2021, the National Associate of Realtors released a survey on the Power of Staging from sellers and buyers’ agents. The survey found that 49% of buyers’ agents saw some increase in home value attributed to staging. Just because your home will sell on the market doesn’t mean you shouldn’t position yourself to receive top dollar. Staging can help show clients the potential of your property and give it a boost in comparison to other similar listings in the quad cities area.

Furthermore, a seller’s market does not guarantee that every property will sell quickly. Homes that are extremely dated and need numerous updates can still sit on the market. Staging can help improve the appeal of such properties (along with a few minor repairs, which we can also help with). People need to be able to visualize their life in your space, and something that feels like it will take a lot of work or will feel dark and old will not create the necessary appeal. This fact is also why we recommend staging empty homes.

While a vacant house may feel more extensive and more open, it can also feel cavernous and dull to prospective buyers. Staging can help give your home an anonymous story. It’s beautiful, clean, and trendy, but without specific personal effects that can distract a buyer from imagining it as their future home.

Reasons to Skip the Staging

The truth is, many homes in this market don’t need help selling. Staging is often a way to help increase the value of a space by making it one of the more appealing properties listed. If your home is clean, has recent updates like new appliances or floors, and is well furnished (a couch that has been in your family for 45 years does not count), staging could be completely unnecessary. Discuss with your agent whether they would recommend staging your space.

Times when Staging has the Biggest impact

If you decide staging is the route to go, here are the two times staging has the most significant impact.

Listing Photos

Did you know that a whopping 83% of buyers’ agents reported that having good photos for a listing is important? This fact is not surprising considering that people view properties digitally first, meaning a home’s first impression is through its photographs or video tours. Stagers know how to rearrange the space to feel open, welcoming, and updated, ensuring you get the best photos possible. The manufactured aesthetic will help attract more buyers to view the property in person and, hopefully, help sellers receive higher offers due to the competitive nature of the listing.

Open Houses

If you’re going through the energy to host an open house, you need to make sure everything is spotlessly perfect. Not a pillow should be out of place since there will be such a large concentration of viewers at one time. It needs to feel open and accommodating. Staging helps ensure that your space doesn’t feel cluttered or tight while also helping your home stand out in a litany of other homes potential buyers will likely be seeing. Staging is like taking the age hold hack of baking cookies on a showing day, but on steroids (imagine the power of baking cookies and staging).

Regardless of if it is a seller’s or buyer’s market, whether you need to dress your home up or want to increase the value of your listing, staging is a viable option. However, in a seller’s market, there is less need to help create a hook for potential buyers. Whereas in a buyer’s market, staging becomes an essential tool to help get your home the price it deserves. Whichever route you choose, work with Emilie Lawrence to succeed in your home buying and selling needs.

Finding the Best Time to Sell Your Home

When you start thinking about listing your home, it helps to know the best time to sell. If you’re not in a rush, positioning your home to be put on the market during the hottest selling season can help ensure you receive the highest dollar while also closing quickly.

What is the Best Season to List Your Home?

It is common knowledge in the industry that spring is the best time to sell your home. We can go even further and say that May is often regarded as the ideal month to list your home. Due to warmer weather and a general feeling of new possibilities, there is an uptick in buyers during this season, making the buying market more competitive, often resulting in higher values for listed homes. The warm weather can help encourage people to get out of their homes and attend open houses or seek out showings a little easier. It is also the ideal timeline for families who can close in late spring and move mid-summer to help ensure their kids get settled and easily enrolled in a new school. The larger pool of buyers means you will likely receive more offers, and more offers mean buyers will be asking for fewer concessions but probably still offering top dollar.

This pro-seller market often continues throughout summer, as many families rush to lock in a home before the new school year begins. This rushed timeline can lead to quicker closing dates as buyers start to panic and rush. At the same time, summer means sellers have to contend with high heat and vacations, which can often be a deterrent for people looking to buy.

When is the Worst Time to Sell a Home?

Have you ever experienced an Iowa winter? If you have, it comes as no surprise why this is the worst season to sell your home. While warmer climates, such as California or Florida, see a healthy seller’s market throughout the year, in places like the midwest, where winter can feel endless, there is a slight dip in selling during that season. Not only do frigid temperatures keep people from braving potential inclement weather, but usually, by wintertime, people are securely settled into the rhythm of their life. For families, listing their home in the winter would mean changing schools, which is often avoided.

Suppose, however, you are considering selling your home. In that case, the winter season can be valuable for doing work such as updating flooring, painting walls, or finally getting to that list of repairs. Those updates will make your home market-ready for when spring finally blooms!

Why this May Not Matter

Ultimately, selling your home comes down to one thing: you. While getting top dollar is often the goal, if you have a job change, want to downsize to cut costs, or need more space, you should list your home when you are ready. While there are advantages to a spring/summer listing, that doesn’t mean it is impossible to sell in the off-season. In fact, seasons matter less if it is nationally considered a seller’s market.

Ready to list you home today? Contact Emilie Lawrence to get started.