In North Carolina, it is common knowledge that homeowners pay the commission for the real estate agents that list their home and bring a buyer. In Southeastern NC, that is typically 6% of the sale price split between the two agents (actually, the split starts at the brokerage and there are fees subtracted before it gets to the agent, but that is a whole other post). What you may not know is that sellers are responsible for a few other expenses in addition to commission. They include:
Revenue Stamps
The seller must pay a tax of $2 for every $1,000 of the purchase price. That means a home sold for $300,000 would require the seller to pay $600.
Deed Preparation
The seller hires an attorney to make sure that all requirements are met for creation of a valid deed. This includes a granting clause that states their intent to transfer the title to the buyer and a statement of consideration that identifies the purchase price of the home. The seller must sign the deed in front of a notary, and the attorney delivers the deed to the buyer’s attorney. Deed prep usually costs $200-$250.
Prorated Homeowners’ Association (HOA) Dues
If applicable, the seller is required to pay prorated HOA dues up to the closing day. If the HOA dues are $250 per year (paid annually) and the closing is at the end of June, the seller will need to pay around $125, because they have lived in the home for half the year. Typically, we see the HOA dues prorated monthly or quarterly depending on how often they are due. Also, if the seller has paid for dues past the closing date, they will be reimbursed for that amount.
Prorated Taxes
Just as HOA dues can be prorated, so are property taxes. The taxes are prorated on a calendar year basis. If the tax bill has not been issued as of the closing date, the attorney will base the tax bill proration on the previous year’s bill. If the taxes have been prepaid, the seller will receive a credit at closing.
The HOA Transfer Fee
It is common for HOAs to charge a transfer fee when a property changes ownership. This fee is meant to cover the costs of completing paperwork, updating the association’s database, giving the new owner copies of the rules and regulations, changing security codes, making new key cards, and other administrative tasks. The cost depends on the management company and the tasks to be completed but can be $150 to $300. This is in the Official North Carolina Offer to Purchase as a seller expense.
The Cost of a Home Warranty
To attract more buyers, it is a good idea to offer a home warranty. Not only do the buyers get the added peace of mind of having service if something goes wrong during the first year of ownership, but the seller gets coverage for the property while it is listed for sale. This has helped our sellers who have seen appliances break down and leaks appear while the home is listed. This can range from $500 to $800, depending on coverage and size of home.
Conclusion
It is important sellers have a clear understanding of these expenses, so they aren’t taken by surprise when they receive their copy of the Closing Disclosure. These expenses are paid at closing out of the seller proceeds. If the seller notices any discrepancies on the disclosure, they should let their agent know right away so it can be corrected before it is signed.
If you are thinking about selling your greater Wilmington area home, take a look at the selling services we offer. We can also connect you with a great agent if you are located outside our service area. Just let us know where you need to sell.
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