Good question. Most people have no idea unless they have gone through the process of selling. Truth is, there are a number of different costs involved many people don’t think about. We’ll walk you through these costs one by one so you can be an informed seller in Minnesota’s real estate market!
1. Paying off your current mortgage. If your home isn’t owned free and clear, you will have to pay off your current mortgage when selling your home. The amount shown that you owe on your monthly mortgage statement isn’t actually your payoff amount. The payoff amount is usually a little bit higher because the payoff amount changes daily as interest accrues. Therefore, you will want to go online or call your mortgage lender to find out what the payoff amount is.
2. REALTORⓇ fees. If you utilize the services of a REALTORⓇ during the sale of your home, you will need to pay them for their services. In fact, when selling a Minnesota home, you are generally responsible for paying the REALTORⓇ that represents you (Listing REALTORⓇ) as well as the REALTORⓇ that brings a buyer to purchase your home (Selling REALTORⓇ). This cost varies by REALTORⓇ, but generally runs between 5% and 7% of the sales price of your home.
Example: Your home sells for $300,000. Upfront you agreed to pay your REALTORⓇ 6% to get your home sold. You will be responsible for paying the REALTORⓇ (actually the brokerage the REALTORⓇ represents) 6% or $18,000.
3. State deed tax. When you sell a Minnesota home, you are responsible for paying a state deed tax based on the sales price of your home. In most Minnesota counties the state deed tax is charged at $3.30 per thousand. Hennepin County charges a little bit more at $3.40 per thousand.
Example: Your home sells for $300,000. You will be charged $990 (300 thousands X $3.30) in all counties other than Hennepin County where you will be charged $1,020 (300 thousands X $3.40).
4. Seller closing fees. This is the cost the seller pays to have a title company or attorney prep the paperwork for closing, get the mortgage payoff information, update the abstract (if necessary), etc. This cost varies depending on which title company or attorney you are closing with. A good estimate for this expense is $1,000.
5. Buyer closing fees. Often in today’s market, the buyer will ask the seller to pay some or all of the buyer’s closing costs. This is something that is negotiated in the beginning of the process as the buyer and seller are negotiating price and other terms of the agreement. This cost usually ranges anywhere between 1 and 3% of the sales price.
6. Property taxes owed. When closing, you are responsible for paying the property taxes for the days of the year you have lived in the home. Even though this cost is often escrowed in a mortgage, this cost will still need to be paid at closing and you will later be reimbursed the money sitting in your mortgage escrow account once the mortgage is paid off. This cost varies depending on what your property taxes are and when in the year you close. You could be responsible for paying anywhere between $0 and the full amount of your yearly property taxes.
7. Other expenses. There are various other expenses you could be responsible for paying as well. Some of these expenses include special assessments on the property, well disclosure fees (if you have a well), association dues and fees (if you live in an association) or buyer home warranty (if agreed upon).
Don’t feel overwhelmed by these expenses. Your REALTORⓇ can walk you through all of these expenses on something referred to as a Net Sheet before you list your home for sale.
Are you interested in finding out what your home would sell for in today’s Minnesota market? Contact EXIT Realty Homefront at 763-856-0195 and one of our agents can walk you through what your home will sell for and what you would “net” from the sale of your home after all expenses are paid.