Seller Series: How Much Will You Net?

You've decided to sell your home & you want to know, after all the expenses, how much will you be able to put into your bank account--or into another property--once you've sold the property? And what are the expenses involved? You'll want to work with your Attorney to get to the exact amount but here's a general formula that you can use to figure out the ballpark number:

1) Sale Price of your home: if you haven't sold your home yet I'd recommend you follow the recommendation of your Realtor & use a conservative amount that you think you will sell your home for rather than the number that you're hoping for. You want to go into this real estate transaction knowing the minimum amount that you're willing to sell your home for. Whether or not you share that info with your agent is up to you but I think it's helpful to be upfront to ensure that your number is realistic & that you're on the same page. If you're working with the right agent you can trust that they will work in your best interest to get you top dollar.

2) Principal Balance of your Mortgage: look at your most recent mortgage statement & find the principal balance. You'll subtract this number from the Sale Price. Note that you need to add in one additional mortgage payment---mortgages aren't like rent which is due at the 1st of the month. Your September 1 payment pays for August. 

3) Real Estate Commission: you will negotiate the real estate commission with your Realtor prior to listing your property. Be sure to find out if the commission is based upon the Net Sale or Gross Sale. What's the difference? Net Sale would be based upon the agreed upon contract purchase price minus any seller concessions. For example, if the contract purchase price is $300k but the buyer has requested $5k towards closing costs, the commission would be based upon your Net amount which in this case would be $295k. A commission based upon Gross Sale price would be based upon $300k

4) Attorney Fee: not all states require Sellers to have an attorney represent a Seller for a closing but Rhode Island, Massachusetts, and CT do.  You should work with an attorney that specializes in Real Estate Law. Your attorney will do the following: review any legal documents that are prepared on your behalf & answer any questions that you have, prepare the Deed that will be transferred to the Buyer; order your mortgage payoff; if there are any Title issues that arise from the buyers title search or any liens on the property, your attorney will work to resolve these issues; your attorney will review the settlement statement that has been prepared by the Buyers Attorney prior to reviewing it with you to make surer there aren't any errors. Attorney fees are typically $800-1500

5) Deed Transfer Tax: also known as tax stamps or realty transfer tax. Typically paid by the seller, the current rate in Rhode Island is $4.60 per $1000. Example: sale price $300k the total transfer tax amount would be $1380 

6) Real Estate Taxes & Prorations: property taxes in Rhode Island are typically paid quarterly, depending upon your town. Depending upon where you land in the tax cycle you may owe taxes for a portion that the buyer will be responsible for paying & therefore you will be responsible for paying those at the closing, this will be deducted from your settlement sheet. Example: If you close May 31 and you've paid for taxes for the first quarter of Jan-April that means you will also be responsible for the month of May. You will also be responsible for water & sewer bills up until the day that you close, your attorney will be in touch with the providers to settle the final bill. Any money owed will be calculated on the settlement sheet.

7) Buyer Concession or Credit: if you have agreed to a Buyer closing cost credit, or a credit amount in lieu of a home repair, you'll need to make sure that you subtract this from the net amount. Prior to listing you may want to conservatively plan for $2-5k depending upon the condition of your home.

Would you like a copy of my Simple Seller Net spread sheet? I'm happy to share--send me a message with your request through email & I will send it to you! I'm happy to help!