Quick Home Search

How to Estimate Closing Costs

If you’re thinking about selling your house, but you’re not sure what the closing costs will be, you are not alone.  Real estate expert Monte Mohr can not only help you calculate the costs, but he will show you how to save thousands in the process.

Closing costs can get complicated; it becomes the “unknown zone” that we want to simplify.  A Channel 4 viewer in Mt. Juliet submitted the following question:

“We heard recently that it is customary as a seller to pay for all of the buyer’s closing costs in today’s market; is that true?  My agent says I should price my home so that I have enough room to pay the buyer’s costs.  Do you agree with this theory?”

No, I don’t necessarily agree with this theory.  In the last 6 months, half of the homes I’ve sold did have buyers ask for their costs to be covered.   But there’s no point in building that number into your asking price and potentially over-pricing your home for the market when not everybody wants those costs to be covered.  My suggestion is to price your home as competitively as you can.  Then, if somebody wants those costs covered and you don’t have that margin you can always build it in.  If you priced your home right, and they really want the house, you can build those costs in.  In other words, if you’ve priced your home at $199,000 and they want $5,000 in closing costs, sell them the house for $204,000 and pay those costs.

Sara from Nashville wrote in with another great question:

“I’m not sure if I can sell my home and get enough for it to cover what I owe.  Is there a formula I can use to determine what my gross sales price needs to be to cover my closing costs?”

This is a really great question in today’s market because there are so many people who don’t have the equity they used to.  The simplest thing to do is determine what your payoff amount is – that’s different than your loan balance – have the bank tell you what your payoff amount is and then divide that number by .925.  Dividing by .925 will cover the costs of the 6% commission (if that’s what you’re paying) and a 1.5% closing cost which is a pretty typical scenario.  So in a typical situation you’ll divide your net payoff amount by .925 which will give you the gross amount you need to get in order to merely pay off your mortgage.  This quick formula will help you know what to expect and it will help you understand what your bottom line really is; the “break-even point” if you will.

Robert has a home for sale in Franklin TN and he wrote in to ask:

“We are selling our home and are not sure what all the closing costs will be.  Would you please give us the approximate costs for selling a $300,000 home?”

Alright, let’s take a look at an example of what those costs would typically be…

Typical Structure:  $300,000 – 6% broker fee – 1.5% other seller costs = $277,500

We Sell Homes 4 Free Structure:  $300,000 – 3% broker fee – 1.5% other seller costs = $286,500

What this means is that if someone took advantage of my We Sell Homes 4 Free program, where I do all the work of selling the home for free, they would have a savings of $9,000 which is a pretty big deal.   That savings is a result of paying a smaller commission when using my We Sell Homes 4 Free program.

Happy Customers of the Week

Cherry and Gerald are Channel 4 viewers from Franklin, Tennessee who heard I’d go to work for free for them.  They had just bought their home in Fieldstone Farms 2 years earlier and had no equity.  I came in and sold their home in 3 days, for full price (with multiple offers) and they saved $8,700 in fees by using the We Sell Homes 4 Free program.

Karleen is another happy client who is also from Franklin.  Her daughter told her about We Sell Homes 4 Free and she sold her home for full price and at the same time saved over $8,750.  She was able to downsize and buy a condo.

The people who take advantage of this program see such a huge difference because it helps them to price their homes competitively without losing any money.

Ophelia from Hendersonville is a repeat customer who utilized the We Sell Homes 4 Free program for the 2nd time.  She bought her home 3 years ago and decided it was once again time to downsize.  This time she saved $7,950.

If you need help buying or selling your home call The Mohr Group at (615) 376-4500 or you can reach Monte directly by calling (615) 300-8393.

Speak Your Mind

*