To determine the bottom line from the sale of your home, you will need to factor in several items which will be deducted from the offer price of your home. Some of these items include the payoff of your mortgage loan, property taxes, and realtor commissions. Your realtor should be able to give you a “net sheet” when listing your home so that you have an estimate of the proceeds from the sale of your home. If the accepted offer price ends up differing significantly from the original list price, recalculate the net sheet to refresh the estimate when you get an offer. This may make a difference in your consideration of any negotiated items such as repairs, home warranty or buyer’s credit.
Here is a list of typical closing costs for sellers:
- Loan payoff costs – Usually, the biggest item to be paid from the sale of your home is the payoff of your mortgage loan. If you have a home equity loan or line of credit, this will also be paid off.
- Property Taxes – In Cook County, taxes are paid a year in arrears. Taxes for the current year are paid next year. At closing, sellers will pay any taxes due to date and also give the buyers a credit for taxes they will pay next year for this year. (Hopefully, that’s not too confusing.)
- Realtor Commissions – Realtor commissions are another cost due at closing. Commissions are negotiated with the seller at the time the home is listed. Payment is made to both the listing brokerage and the brokerage of the buyer’s agent.
- Owner’s Title Policy – The seller is responsible for transferring the deed to the home free of any issues with title. The owner’s title policy protects the buyer against any future third party claiming an interest in your property from a time prior to their purchase. If some long-lost relative of the seller comes forth in the future claiming an interest in the home, the buyer can have a real estate attorney claim a file against the title policy to protect them.
- Transfer Taxes – There are three levels of transfer taxes in Illinois. Transfer taxes are paid to the state, county and some but not all local municipalities. Chicago levies transfer taxes but not all suburbs.
- Attorney Fees – Real estate attorneys are typically paid at the closing.
There may also be some minor document recording fees paid at closing, survey costs and fees paid to the title company for processing the closing. If the buyer has negotiated for the seller to pay a credit toward their closing costs, this will also be deducted from the offer price.
Understanding these closing costs are important for the seller to know their bottom line. Your attorney will work with the title company, buyer’s lender and buyer’s attorney to prepare the final settlement statement. Generally, the seller will walk away with a nice check to put towards the purchase of a new home or add to their savings account. However, there may be some sellers who will need bring funds to the table in order to complete the sale. If this is possible scenario for you, calculation of the net proceeds makes sense earlier rather than later.