Seller Expenses: Explained | DOBI

Seller Expenses: Explained

What Costs to Prepare For When Selling Your Home

If you’re getting ready to sell your home, you may be wondering what seller expenses you’ll be responsible for? We’ve put together an entire glossary of seller expenses so you can be prepared when the time comes. Of course, when you work with a DOBI agent, we’ll always make sure you have everything you need to know every step of the way.

Here is our complete glossary of seller expenses explained:

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Current mortgage payoff

The current mortgage payoff is how much you will actually have to pay to satisfy the terms of your mortgage loan and completely pay off your debt. You can sell your house even if you still have a mortgage remaining. Consider that most mortgages come with 15 or 30 year terms, while 52% of recent sellers sold before owning their home for 10 years, according to data from the National Association of Realtors.

If you are selling a house with a mortgage, you’ll use the proceeds from the sale of your home to pay off your existing mortgage balance. Your lender will receive their payout at the time of closing. Or, after satisfying the mortgage debt and covering additional selling costs such as commissions and taxes, you will (hopefully!) have some profits to take home.

If the amount received from the sale falls short of your outstanding mortgage balance and selling costs, you will have to cover the difference with funds other than those from the sale.

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This type of loan is when the borrower uses the equity of their home as collateral. As long as you’ve built some equity in your home, and your home is worth more than you paid for it, you generally won’t have any issues selling.

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Listing Commission

This listing commission are payments made directly to real estate brokers for services rendered in the sale of a property. The home seller is usually responsible for the entire real estate commission. However, home sellers will often include the commission price in the final sale price of the home, making the home buyer indirectly responsible for the commission fee. The home buyer is also responsible for any closing costs, appraisals, and other fees related to the sale of the property.

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Selling Commission

These are payments made directly to real estate brokers for services rendered in the sale of a property. If you’re selling a home, you usually pay commission to both your listing agent and the buyer’s agent when your home sale closes.

The average real estate agent commission covers a wide range of services an agent provides during a home sale. These services can include: working with the seller to set a realistic price for the home, marketing it through a variety of online and offline channels, professionally presenting the home to potential buyers, negotiating the transaction details, being present during inspections and appraisals, and ultimately closing the sale.


Compliance Fee

All the expenses that a firm incurs to adhere to industry regulations- this is also known as the Transaction Fee. While it’s not as pricey as the commission, the transaction fee is a notable chunk of change that must be paid by either the buyer or the seller to offset the costs of processing paperwork.This fee covers the cost of things like document storage and management.

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Owner Title Policy

Owner’s title insurance provides protection to the homeowner if someone sues and says they have a claim against the home from before the homeowner purchased it. Most lenders require you to purchase a lender’s title insurance policy, which protects the amount they lend. You may want to buy an owner’s title insurance policy, which can help protect your financial investment in the home.

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City or Country Transfer Tax: $1.10 per $1,000

A transfer tax is the city, county or state’s tax on any change in ownership of real estate. Your transfer tax is equal to a percentage of the sale price or appraised value of the real estate that you buy or sell.

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Michigan Transfer Tax: $7.50 per $1,000

A fee that the state of Michigan and each county charges when a deed or property is transferred from one owner to another. The transfer tax rate is variable, depending on the consideration paid (purchase price) or the fair market value.

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Title Company Closing Fee

A charge from the title company to cover the administrative costs of closing. Title fees are paid to help financially protect you and/or your lender in case the title you receive is unverified or incorrect.

Title fees consist of a number of factors including title insurance, loan policy of title insurance, owners policy of title insurance, notary fees, government filing fees, and and escrow fee.

Home Warrenty

Home Warranty

A home warranty is a contract between a homeowner and a home warranty company that provides for discounted repair and replacement service on a home’s major components, such as the furnace, HVAC, plumbing, and electrical systems. Additionally, this reassures a homebuyer and provides the seller with a measure of protection against complaints about home defects that arise after the sale closes.

Seller Concessions

Seller Concessions

Closing costs that the seller has agreed to pay. The closing costs that seller commissions can cover can include property taxes, title insurance, loan origination fees, inspection fees, recording fees, appraisal fee, and attorney’s fees.Seller concessions can help both the buyer and the seller. For the seller, offering concessions can make their home more attractive to potential buyers, especially in a buyer’s market.

Seller concessions also help buyers who don’t have the cash on hand to cover all their closing costs. First-time home buyers often underestimate the costs associated with buying a home, so seller concessions are a way to help offset some of those costs and make the home more affordable.

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Association Status Letter

A written status of how much the dues are for the property, when they are charged, current standing of payment, and the balance of any outstanding amounts the title company needs to collect at closing. If a property is part of an association, the buyer becomes part of the association upon purchasing that property. Per the contract, the seller is obligated to provide the Association Documents to the buyer.

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Use & Occupy Escrow

A temporary agreement between the buyer and the seller that allows one party the right to use and occupy the property for a set period of time. It’s usually put in place if the buyer needs to move into the property before ownership can be transferred. This is sometimes referred to as a U&O.

One important thing to understand is that this agreement is not the same as a lease. While it’s best to have a lawyer or real estate agent explain to you the differences between the two, it essentially boils down to the fact that the buyers aren’t considered tenants.

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Escrow (Water/Tax/Repair)

A contractual arrangement in which a third party receives and disburses money or property for the primary transacting parties, with the disbursement dependent on conditions agreed to by the transacting parties.