Selling Your First House? Here's the Scoop!
You don't have to look too far to find lots of information for "FirstTime Home Buyers" -- but what about First Time Sellers?
Meeting with many first time sellers in the Indianapolis area over the last several years, we've discovered they have lots of questions. They're ready to move, but often don't understand how the process works, how long it takes, what to expect and how much it costs. Often, after chatting for awhile, they come to the conclusion that it's not the right time for them. Maybe they owe more than their home is worth. Maybe their credit score isn't adequate to qualify for a new loan to purchase their next home. Many don't realize the impact of Indiana's pro-rated property taxes which bill one year in arrears. Yes, one year..... and unfortunately, several central Indiana counties, like Marion (Indianapolis) are currently billing as much as 2 years behind. This can make a dramatic impact on the seller's bottom line.
So this is the first blog in a series dedicated to answering the questions of the first time seller. Maybe you're thinking you won't be ready to sell for another year or so. Don't stop reading! Now is exactly the right time to learn what it takes to effectively prepare not only your home, but also your finances.
Today's blog answers the question "What are brokerage fees and how much are they"?
Brokerage fees are the amount a Brokerage Company charges you, the homeowner, to sell your home. Each Brokerage Company may charge whatever the market will bear. In Indiana, it's not unusual for the fee to be between 6 -7% of the sales price. For example, if your property were to sell for $250,000, and the fee were 7%, the charge by the broker would be $17,500.
Wow! That's a lot of money! Where does that all go?
Well in a typical Indiana listing contract a large portion of it, usually at least half, or $8,750 in our example, is paid to the broker & agent representing the buyer of your home. Your listing agent cooperates with not only other local companies in Indianapolis, Greenwood, Center Grove, Whiteland, etc., but also brokerages and relocation companies from around the country to find a buyer - any buyer - to purchase your home. After all, you don't care who brings the buyer, or where they come from -- as long as someone does! Providing a full share of the brokerage fee to the buyer's agent insures that agents from all companies are incented to show, and sell, your home.
Where does the other portion go? It funds all of the marketing and advertising used to promote your property - signs, flyers, on-line advertising, print media, newspapers, Open Houses, virtual tours, photography, etc... It also compensates your listing agent who has been working diligently to promote the sale of your home and who will guide and represent you through the entire transaction from putting the sign in the yard to the closing, or as the Hoagland Team prefers to call it....The Celebration Table!
An interesting thing about brokerage fees is that they are never paid if the home doesn't sell. They also don't change if the home sells in 2 weeks, 2 months, or 2 years. Imagine going to the doctor and not paying until you were cured!
So all of the expenses of selling are brokerage fees - right? Well, not quite. Future blogs in the series will delve into some of the other costs like Title Insurance and pro-rated taxes along with other topics like staging, pricing, marketing and.....