Selling Costs
How Much Does It Cost to Sell?
Selling a home involves more than listing it and collecting a check. Understanding the categories of costs that may affect your proceeds helps you plan realistically and avoid surprises at closing.
Every sale is different. The amounts described below depend on your specific contract, your property, and the terms you negotiate. No single number or percentage applies to every seller in Central Kentucky.
Compensation
Real Estate Commissions Are Negotiable
When you hire a real estate brokerage to sell your home, the compensation you agree to pay the listing brokerage is negotiable and is established in your listing agreement. Commissions are not set by law in Kentucky. The amount is agreed upon between you and your brokerage, and it varies from one sale to the next. Ask your agent to walk through the commission arrangement before you sign a listing agreement so you understand exactly what is being paid and for what services. This is a negotiable expense.
What about compensation for a buyer broker?
Depending on the transaction, a seller may agree to contribute toward compensation for a buyer broker. This is separate from the compensation agreed to with the listing brokerage, is not automatically required, and is negotiable. Any contribution should be considered along with the other terms of the offer and its effect on your estimated net proceeds.
Your Net Proceeds
Categories That May Affect Your Proceeds
Your starting point is the final sale price. From there, your proceeds may be reduced by any of the following items, depending on your specific contract and situation.
Mortgage Payoff
Your lender will provide a payoff statement showing the amount needed to satisfy your remaining loan balance, including applicable interest and any other amounts included in the lender's payoff statement. This amount is deducted from the sale proceeds before you receive anything.
Brokerage Compensation
The compensation you agree to pay your listing brokerage in the listing agreement is negotiable. Separately, you may agree to contribute toward compensation for a buyer broker as part of the purchase contract. Both amounts depend on what you negotiate.
Negotiated Concessions
A buyer may ask you to contribute toward their closing costs, prepaid expenses, or a temporary interest rate buydown as part of the offer. Whether you agree and how much you agree to is negotiated in the purchase contract and varies with every transaction.
Repairs or Credits
After a home inspection, buyers often request repairs or a credit in lieu of repairs. These amounts are negotiated between buyer and seller. Depending on the buyer's financing, certain property conditions may also need to be addressed for the loan to proceed.
Applicable Closing Expenses
Depending on your contract and local practice, certain closing costs may be your responsibility as the seller. These can include title insurance, transfer taxes, recording fees, survey costs, attorney review fees, and courier or document preparation charges. Each item and who pays it depends on your contract and local custom.
Taxes and Prorations
Property taxes are typically prorated between buyer and seller at closing based on the portion of the year each party owned the home. You may owe the buyer a credit for taxes you have not yet paid, or receive a credit if you have prepaid beyond your ownership period.
Liens and Outstanding Amounts
Any lien, judgment, tax lien, or other amount legally attached to the property must generally be satisfied from sale proceeds before clear title can pass to the buyer. A title search will identify these items during the closing process.
Optional Preparation Expenses
Expenses like professional cleaning, staging, minor repairs, or a home warranty are optional. You choose whether to spend on these items and how much. Each should be weighed against what it could do for your particular sale.
Understanding Your Number
Net Proceeds at a Glance
Your net proceeds start with the sale price. From there, the items that may reduce what you walk away with include:
Protect Your Proceeds
How to Understand
and Protect Your Net
- Compare and negotiate commission arrangements before signing a listing agreement.
Understand exactly what you are agreeing to pay and what services are included before you commit.
- Review every line of the estimated net sheet.
Question anything you do not recognize before closing. Your agent should be able to explain every entry.
- Discuss known property issues before spending money on repairs.
Not every issue needs to be fixed. Knowing which improvements are likely to help your particular sale helps you spend wisely.
- Treat optional expenses as choices, not requirements.
Staging, home warranties, and deep cleaning are decisions. Spend only where it is likely to matter in your market and price range.
Get Your Estimated Net Sheet
Want a clearer idea of what you could walk away with? Fill out the form below and Daniel will prepare an estimated seller net sheet based on your property, potential sale price, and the expenses that may apply to your situation.