TRANSACTION COSTS ASSOCIATED WITH SELLING
YOUR HOME
By
Bennett S.
Schwartz, Esq.
In
order to avoid a potentially unpleasant surprise regarding your closing costs
at the conclusion of your residential real estate transaction, inquiry should
be made with a real estate attorney with respect to your anticipated closing
costs early on in the process. Once the
contract is signed for the sale of your home, it is likely too late to do
anything about these subsequently discovered costs, or to renegotiate with your
Buyer. Some of these costs to consider
are:
SURVEY
Usually
a Buyer will request a boundary stake survey showing all improvements on the
property. The cost for one can be
anywhere from several hundred dollars to in excess of one thousand dollars. This is a negotiable cost, and there is no
legal requirement that the Seller automatically be responsible for this
payment. Your real estate attorney can
evaluate your contract in totality and advise you as to the appropriateness of
attempting to allocate this survey cost to your Buyer.
HOME INSPECTION
A Buyer
will often negotiate for the right to have certain inspections done with
respect to the property. These might
include a generic home inspection of the structure, mechanical systems, etc.;
pest inspection; inspection for lead based paint and other environmental
hazards; and
where applicable a well water and septic inspection. Generally these costs will be incurred by
the Buyer so long as the undertakings for these inspections are performed in a
reasonably prompt manner and within certain contractual parameters.
TITLE COMPANY CLOSING
TRANSACTION FEE
Today,
most residential real estate closings are held at a title insurance
company. This individual will be
responsible for preparing a variety of forms incident to the closing of the
transaction. The charges for this service
continue to increase, and now may consist of several hundred dollars. Again, whether the Buyer or the Seller is
responsible for the payment of this transaction fee is negotiable. Consequently, you should be mindful at the
time of negotiating your purchase agreement, of the potential for shifting this
fee to the Buyer or perhaps sharing this expense equally.
OWNERS’ POLICY OF TITLE
INSURANCE
This is
an insurance premium charged by the title insurance company for the Buyer’s
benefit, insuring that the Buyer is obtaining good and marketable title from
you with respect to the real property. It is generally accepted that it is a Seller’s
obligation to pay for the cost of an owners’ title insurance policy. Title insurance is expensive, and is
determined based upon the sale price of the property. A sale in the amount of $250,000, for
example, will cost the Seller about $1,185.00.
Michigan
Transfer Taxes are charges payable by a Seller.
Payment of Transfer Tax some years ago was hardly noticeable when
In
conclusion, there are numerous other charges and expenses associated with the
sale of residential real estate. If you
have a mortgage on the property, the mortgage balance will need to be paid off
and taken out of your sale proceeds at the time of closing. Real estate property taxes will need to be
prorated. A real estate attorney should
be consulted when you sell real estate for assistance in thoroughly examining
your costs associated with the sale of real estate and guide you in making sure
that you do not pay more than what is legally required and appropriate.
The Troff
Petzke
Ammeson Newsletter is published as a free service to our clients and
friends. The articles in our Newsletter are for general information and cannot
be relied upon as legal advice or opinion.
It is simply not possible to provide competent legal advice
without knowledge of the specific facts attendant to any given situation.
Therefore, if you have questions regarding an article in our Newsletter
you are encouraged to contact the author to discuss the topic further.