What Fees & Charges Can I Expect as a Seller?
by Andrew Sundell
Home Selling 101: Seller Charges & Reimbursements
It’s not every day that the average person buys or sells property. Thus, it is understandable that there may be confusion surrounding the credits & debits of the typical transaction. With this article, I want to make you aware of the typical charges you can expect for your home sale in PA or NJ.
It is important to understand that with each transaction, there are several parties working together to get you to the closing table. In addition to your real estate agent, there is office administration staff at your agent’s brokerage, title representatives, local township officials, attorneys (typically in NJ), public notaries, mortgage lenders, inspectors, property managers, contractors, HOA/Condo representatives etc. All of these folks provide specific input into the transaction so that it runs smoothly, hopefully.
As a SELLER, you will typically see the below charges & reimbursements:
Charges & Fees
- Real Estate Agent Commission: The commission is normally calculated based on the gross sales price of the home. Let’s say you and your agent agreed to a 5% commission to market & sell your home. Assuming a 50/50 split, this would mean your agent receives 2.50% as well as the buyers’ agent. So if your house sells for $100,000, the total commission would be 5% X $100,000 = $5,000. This means $2,500 goes to each agent.
- Broker Admin Fee (or something similar): This is an additional charge many real estate agents charge to recoup costs that they owe per transaction to their broker, which supports the office staff that help with each deal. This fee does not typically exceed $500.
- Seller Credit / Seller Assist (If Applicable): This only applies if the seller and buyer agreed to a seller credit. A credit can be the result of many different situations (i.e., home inspection negotiations, damage to the house during the settlement period, a financial incentive for buyers, etc.). For example, let’s say the buyer had a home inspection performed which revealed some water damage to a door. In lieu of repairing the door, the seller may offer a seller assist of $200 at settlement whereby $200 of the proceeds goes back to the buyer. This way, the buyer can choose which contractor and door to use at their convenience.
- Home Warranty (If applicable): Many times in residential home sales, the idea of a home warranty is floated between the parties. It is more common on older houses with older systems (HVAC, plumbing, appliances, roof, etc.). What the Home Warranty provides is a 1-2 year coverage period (post-settlement) for the buyers so that in the event one of the covered systems fails, the home warranty provider will repair or replace the defective unit. Typical cost of a home warranty can range between $450-$1,000+ depending on the coverage and term.
- Use and Occupancy Inspections (If applicable): Many local municipalities where the subject property is located will require the seller to furnish a Use & Occupancy Certificate to the buyer at closing. Some municipalities require inspections be performed by a township official, and many have strict guidelines in place for what will pass. For example, some townships in PA (and all in NJ) require that smoke detectors on newer construction be electronically interlinked and hardwired together. If a township official finds that your smoke detectors are not up to the standard, you will have to pay a contractor to fix the issue and then pay for re-inspection by the township. It depends on the guidelines of your local municipality, but typically these inspections cost anywhere from $100 – $300.
- HOA or Condominium Resale Packages (if applicable): If your house is located in a community overseen by an HOA or Condo Association, then you, as the seller, will have to pay for a “Resale Package”. This is typically ordered once inspections are negotiated (if applicable), and is required by the association to pass ownership. The “package” typically costs between $200 – $600 and contains a Resale Certificate, a Final Payoff Statement to the Association, Bylaws, and Rules & Regulations. The purpose of it is to ensure the seller is in good standing with the association.
- Additionally, some HOAs & Condos will require a pre-settlement inspection to ensure your home is adhering to the community guidelines, and if a violation is found (i.e., you used an incorrect paint color on your front door), you will be responsible for correcting the violation before settlement, and perhaps having to pay for re-inspection.
- Real Estate Transfer Tax: In both PA & NJ, the buyer & seller are each responsible for paying 1% of the gross sales price to the state. This means that if the house you are selling sold for $100,000, you will owe $1,000 in Real Estate Transfer Tax to the state, as well as the buyer.
- Attorney Fees (If applicable – usually in NJ): In New Jersey, built into each sales contract is an “Attorney Review Period” of 3 days from the execution date. This allows both seller and buyer to consult with their attorney about the contract before it is officially “under contract”. Additionally, many attorneys prepare deeds and other related documentation in NJ for a fee. It depends on the extent that you involve your attorney in the transaction, but this can typically cost anywhere from $0 – $1,000+.
- Title/Notary Charges: With each transaction, the title company that is conducting the settlement will require certain docs be notarized, and they may have some miscellaneous charges for overnighting docs to certain parties. These charges are typically no more than $150.
- School/County/Municipal Taxes: If you have outstanding taxes to be paid for the period leading up to the date of settlement, these will be netted from your gross proceeds at settlement.
Reimbursements
- School/County/Municipal Taxes: If you’ve paid taxes for the current period which provide coverage until a certain date after settlement, you will be reimbursed a prorated amount. For example, let’s say you owe $1,000 School Tax at the beginning of each quarter that you just paid, and your settle date is halfway through the quarter. Since your $1,000 covers until the last day of the quarter, you will be reimbursed $500 by the buyer since they will take ownership halfway through.
A Final Thought
That concludes the general overview of the typical real estate transaction and associated fees from the SELLERS’ perspective. As you can see, the fee structure really depends on your local municipality, the type of home you’re selling, the community in which your home is located, the terms of your sales agreement, and various other factors.
If you have any questions about any of the fees or reimbursements that you’re experiencing, please feel free to send me a message! I hope you’ve learned something from this article, and I will continue to create useful and knowledgeable content so be sure to check back frequently!
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