How much does it cost to sell a house?
The cost to sell a house may vary in different markets. In the state of Arizona, we do not use attorneys for real estate transactions. Real Estate agents are licensed to practice contract law as it applies to the sale of residential and commercial real estate. Buyer’s and sellers certainly can have an attorney review documents and consult as necessary. However, most buyers and sellers to do not use attorneys, which also helps reduce buying and selling expenses. Here are typical selling costs in Phoenix.
#1 Seller Loan Payoff
Once the seller is under contract with a buyer, a copy of the purchase contract goes to the title company. The title company obtains permission from the seller to obtain the final loan(s) pay-off. The lender will identify the amount of the loan to be paid off by a specific date.
The loan payoff will also include any interest due. Some lenders may charge a fee to provide the pay off information at the time of sale.
#1 Real Estate Agent Commissions
The seller pays for the sales commissions for the selling agent and the buyer’s agent. The amount of the real estate commission is agreed to by the seller and the real estate agent at the time the property is listed. Commissions are negotiable between the two parties. Different agents have different fee structures and can vary by the amount of work involved in selling the house.
#2 Title Fees
A title company typically handles the process to ensure the title to the property is accurate, obtain loan pay off from the seller’s lender, receive the buyer’s earnest money, receive the buyer’s loan to purchase the property, ensure taxes and HOA dues are paid and distribute sale proceeds. The Title company is a neutral third party in the transaction. Typically the buyer selects the title company of choice.
Title company fees can vary. However, title companies are regulated by the state and each title company files their rates with the state. Some title companies “bundle” their fees, providing one escrow fee. Other title companies my list fees line by line. Fees can vary also by the services the title company provides. For example, if a seller would like a mobile notary to come to the home or office, there may be an additional fee for this service. If the seller has a loan to pay off there may be courier fees to send payoff and final documents back to the seller’s lender.
#3 Buyers Title Insurance Policy
In Arizona, the seller buys a title insurance policy for the buyer that ensures the buyer has clear title to the property. The title company conducts a search to ensure the seller is the only legal owner. They search county court records to identify any other legal property owners, any liens or loans on the property. This insurance policy ensures the buyer that the seller has a clear legal title to sell the property.
#4 Property Taxes
Property taxes in Arizona are paid in arrears, so the seller pays all taxes due up to the date of closing. If the seller had a loan on the property, their lender would refund any tax money held in their impound or escrow account.
#5 HOA Fees
Typically a Home Owner’s Association will charge a seller the cost of sending the Covenants, Conditions & Restrictions (CC&Rs) to the buyer. This is typically called a Disclosure Fee. Arizona state law requires the seller to pay this fee. Once notified by a title company that the seller is under contract to sell the property, the HOA is notified of the pending sale. Typically the HOA will schedule a drive-by of the property to determine if there are any outstanding HOA violations, such as overgrown shrubs, damaged fencing, etc. If the HOA determines the existing homeowner is in violation of the Covenant, Conditions, and Restrictions (CCR) of the community. If so, any corrections need to be made and any fines paid at or before the closing.
The seller’s HOA Fees will be prorated for the dates the seller actually owns the property. If the seller has paid the HOA fees beyond the closing date, they would receive a credit for the prorated amount at closing.
#6 HOA Transfer Fees
This is a fee the HOA charges to update their records to change the name on the property from the seller to the buyer. The fee can be paid by the buyer, the seller or split between the two.
#7 Reconveyance Tracking Fee
If the seller has a loan on the property, there is also a reconveyance fee charged by the title company. This is a service to ensure their lender shows the ownership transfers property and releases their lien on the property.
#8 Buyer Closing Costs or Credits
Sometimes a buyer will ask the seller to agree to pay some of their closing costs. This agreement is part of the initial purchase contract. If the seller agrees to assist with buy buyer closing costs, this will be identified as a debit to the seller at closing.
#9 Home Warranty
If the seller has agreed to provide the buyer a home warranty as part of the initial purchase offer, this charge will appear as a debit to the seller on the final settlement statement and paid as part of the closing.
The costs to sell a house in Arizona will vary from seller to seller. At a minimum, and loans need to be paid, taxes and HOA fees (if any) need to be paid. There are typically fees for a title company to handle the escrow, complete the title search, receive buyer funds and record the sale with the county. Buyers and sellers will be asked to provide information for the title company in a timely manner. The title company will verify the identities of the buyers and sellers. They will ask the seller if they want to have cashier’s check made out for any proceeds from the sale or whether the funds should be wired. Title companies stay in constant touch with the buyer’s real estate agent and the seller’s real estate agent to ensure any addendums to the contract are executed correctly. The title company follows the directions in the contract to ensure the rights and responsibilities of buyers and sellers are contractually adhered to. They make sure the sale records with the county to ensure the appropriate legal transfer from the seller to the buyer.
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