How Much of My Sold House Would Go to Realtors and Closing Costs?

Hello Roofus, thanks for your question. Selling your home is a complex process that involves numerous costs, including realtor’s commissions and closing expenses. It’s important to understand how much of your sale price will actually go to these expenses. Let's break it down step by step.

Commission and Realtor Details

Realtors typically receive a commission, which is a percentage of the sale price. In your case, the realtor’s commission is set at 4 percent. This should be clearly outlined in your contract. Keep in mind that the realtor may keep a portion of this 4 percent, but it should go to your buyer’s agent as well, usually 2.5 to 3 percent.

State Excise Taxes

The State Excise Tax in Washington is 1.28 percent, but if you're in King County, there's an additional 0.5 percent, making the total 1.78 percent. These taxes are quite variable and based on the price of the home. To be safe, let’s assume the 8 percent figure covers everything. This includes preparation costs for putting the house on the market or for buyer inspections.

Lowering the Commission

Some realtors allow you to negotiate the commission slightly downward. If your agent keeps 3 percent of the 4 percent, you might consider listing your home as a For Sale by Owner (FSBO) to save the entire 4 percent commission. Be cautious; ensuring your agent covers the buyer’s agent commission is crucial.

Other Costs and Fees

Here are some of the other costs you should factor in:

Owner’s Title Insurance

Title insurance protects the homeowner from any issues with the property's title. While this is a necessary expense, the cost varies. Contact local title companies like Chicago Title to get an estimate. Make sure to ask for a breakdown of all fees.

Escrow Fees

Escrow fees go towards handling the closing transaction. This is a standard part of the sale process and should be covered by the title company or escrow agent.

Real Estate Taxes

You will need to pay some of the local property taxes up to the day of closing. Typically, this can range from 8 to 10 percent of the home’s value. Try to keep it at 8 percent and negotiate if possible.

Net Proceeds Analysis

Your realtor can provide an estimate of net proceeds, which is the amount of money you will receive after all costs have been deducted. To achieve this:

1. Multiply your list price by 0.04 to find the dollar amount going to your realtor.

2. Add in the other costs mentioned (state and county excise tax, title insurance, escrow fees, real estate taxes, and any repairs or buyer assistance).

3. Subtract all these costs from your selling price to determine your net proceeds. Having a detailed net sheet can help you understand exactly what to budget for and what you can expect to take home.

Conclusion

Selling your home involves a range of costs, from realtor’s commissions to state and local taxes. While a 4 percent commission may seem high, it’s crucial to ensure it is covered and understand how much of it is going to your agent and the buyer’s agent. Understanding these costs will help you make an informed decision and protect your interests throughout the sale process.

Stay informed and proactive to ensure a smooth and profitable home sale.