Are you thinking about selling your home in today's market and wonder what the bottom-line check will be at the closing table? In this video, I'm going to show you the true cost of selling your home in today's market. I’ll explain some common seller expenses and give you an idea of what you can expect to pay in total closing costs.

Figuring out what it cost to sell your home in today's market isn’t a mystery. This is something that we do for every client. It’s also something that every real estate broker should be doing for their client when they meet with them for the first time and any time a new offer comes in.

Transfer Tax

To understand how much you can expect to pay as a seller, I use our Seller’s Net Proceeds Calculator. We first enter the property address, owner’s name, and the county that the property is located in. When we choose the county, the multiplier is automatically calculated on what the county transfer taxes are. Every county in the state of Illinois has a combined transfer tax, typically $1.50 per $1,000. This is your exit fee to leave the county.

We’re also going to choose the municipality, which is your village, city, or town. Wherever you're living, if your municipality shows up, that means that town does have a transfer tax. The city of Chicago has a large transfer tax along with Harwood Heights and Northridge. Their rate is about $10, so it can get a little crazy out there.

Property Taxes

In our Seller’s Net Proceeds Calculator, we’re also going to enter in your sales price. For example, let’s say we sold for $300,000. We’ll enter your first mortgage balance—or your payoff—and a second mortgage if you have one.  Next, we’ll enter last year's ascertainable tax bill.

Because taxes are a year behind, we're going to grab the last actual real estate bill that we have and enter in that dollar amount. If you’re closing on your property today, the taxes for 2020 are not yet due or the first installment is just about due. You’ll give the buyer a negotiated percentage increase over the last year's tax bill which, in most cases, is 105%.

This is negotiated during your offer, though you’ll usually end up giving the buyer 5% more based on the last tax bill. The reason for this is that since you're behind, there's a gamble in the buyer taking possession of your property. They don't really know what this year's tax bill is, so it's a common courtesy to end up with that 105%.

If the taxes go up more, you made out as a seller. If the taxes only go up 1-2%, the buyer did make a couple of extra percents. However, this give and take is just a norm in the marketplace. Remember, too, that everything is negotiable. For example, if you're buying a bank-owned foreclosed home, the bank does not negotiate on that. The bank says the taxes are prorated at 100%. There's no negotiating. So if you buy a foreclosure, know that you are leaving a few dollars on the table, because the buyer and seller typically agree to this number.

Keep in mind that real estate taxes are a necessary evil. They're required. It keeps the villages, towns, and townships going. Also, these taxes are not really a closing cost, but they do come out of your gross proceeds to get you to that net proceeds. Hopefully, that tax money is in your bank account or escrow account. And if your mortgage is not paid off, your lender should be taking real estate taxes every month and putting them in an account for you. The lender then has to refund you or reimburse you within 30 days after closing so that money gets added back into your net proceeds.

Title Insurance And Recording Fee

The next fee is your title insurance, which you need to purchase for the buyer. Like everything else, this fee goes up in price. From the time you bought your insurance, fast forward 30 years later and it will obviously cost more. As the buyer, you’re required to buy title insurance.

Based on a sales price of $300,000, title insurance will cost about $1,930 if we use Starck Title. This is typically about $200 to $300 in savings compared to Chicago Title and some of the other big players out there. Using Starck Title will save you some money, but you won’t know exactly how much until we put all the numbers in. Title insurance is your proof and guarantee to the buyer that no one else can come out of the woodwork and claim ownership of the property. It covers you and protects the buyer in the transaction.

Next up is the recording fee. This cost is used to record a mortgage or a deed. It's $55 for you to record, and then we have a wire fee. This is because nobody wants to touch money nowadays, and we're becoming a cashless society. Anything typically over $50,000 will not be in check form. Instead, they're going to charge you $45 to wire the proceeds to your bank account.

We then have some additional gap coverage closing cost protection for $50. Remember, when you go to sell your home or buy a home, you might be sticker shocked with the title charges. They're probably at least three times higher than if you were to sell a home in Wisconsin or other states

Inspections, Permits, And Zoning

Some villages require an inspection when you sell. For example, in Elmwood Park, you cannot even put a sign out in front of the property for sale sign until you have the city or village come in and do a pre-occupancy or pre-sale inspection. They're going to come through and make sure you don't have an illegal apartment, make sure all permits were billed, and ensure that you didn't do any work.

They check everything and if they find anything, you're going to have to fix it. Some of the repairs you can put off to the buyer, but they will not let you put your home up for sale until you have that. There are also zoning certificates required in the city of Chicago. However, I haven't heard of any other suburban community that has a zoning certificate requirement.

Attorney Fees

Attorney fees vary and are negotiable to some degree. A rough estimate is $450, as our attorney or a couple of the attorneys that we use with Starck Title charge. This fee is discounted a bit, with typical attorney fees ranging between $450 and $600.

On the seller’s side, you will get some discount attorneys as in any industry. When you go to list your home, a week later you're going to get some letters in the mail. Remember those ambulance chaser attorneys? Well, we like to call that the real estate chasing attorney. When a property goes active, they see that in the database. They have a service that's going to mail you out their marketing letter that says they're going to offer you $99 special or $200 special for attorney services.

What they're not telling you is that you're required to use their title company or one that they're affiliated with. With that, they're typically making a few $1,000 on that title company referral. Sometimes they will disclose that to you right away like they're supposed to when you sign the engagement letter. Sometimes, though, those numbers are not disclosed until the closing table when they slide a piece of paper in front of you. So be very careful. Again, you get what you pay for there.

Our title company saves you about $300 to $400 on average. On a $300,000 property, it’s probably about a $250 to $300 savings.

Home Warranty, HOA, And Survey

The next fee you’ll have is the home warranty. When a buyer's agent submits an offer, they might ask at that time for you to purchase a home warranty for them. Or we may have accepted an offer from them, and they did a home inspection that revealed the mechanics of the house are in good condition, but they're older. Older mechanics are excluded from a home inspection, so they typically can't ask for that.

If the buyers are nervous that they might break, they may ask you to provide a home warranty form to give them a year of coverage. You could say yes or no. If the home is in great condition, you probably won’t have to pay for a home warranty.

Next up, we have the condo, HOA, and association fees. These can get costly. If you live in a condo, townhome, or subdivision that has an HOA, you could see $200 to $600 in fees that the condo management company will put on you when selling a property.

Another fee is the purchase of a survey for the buyer. The buyer’s mortgage company says that we must give them a survey that's six months or newer. However, it doesn't say who's going to pay for it. The contract says the seller is going to pay for it, which is the common contract that we use in Northern Illinois. However, that's negotiable. As we're negotiating the contract, we always can say to the other side that we're not willing to pay the survey for your mortgage company. Typically, it's not done, but you could do it if you're trying to save a few dollars. The buyer may say yes or no, but it doesn't hurt to ask.

The average survey can range anywhere from $350 to $700, depending on the lot size and where it's located. On average, it’s about $500.

The Commission

Another cost you’ll have as the seller is the marketing fee and the brokerage fee, also known as the commission. In the state of Illinois, the commission is negotiable. It's not fixed, and you as the homeowner can seek out the lowest brokerage fee possible out there. Some people may do it for 4%, while I may do it for 5%. Some real estate companies may have an office policy that says they can't go any lower than 5% to 7%. I've seen commission as high as 8% to 10%, depending on where you're at.

I’ve been in business for 30 years, so I've seen everything. More realistically, you're probably going to end up paying between 5% and 6%. For example, the listing fee and buyer fee can be split up. If it’s 5%, we can decide what we're going to pay the co-op agent. This is somebody that brings in the purchaser, and we want as many co-op agents and buyers to come through your home as possible. This is going to maximize the dollar and offer possibility, so it’s important, we keep that number exciting for the buyer's agent.

Let’s say we pick 2.5% for the listing side brokerage fee and 2.5% for the buyer’s side. You're paying the whole 5%.

Administrative Fees

Another thing you’ll need to account for is administrative fees. A rough estimate is $395, which is the administrative processing fee that our company has. While there are a few mom-and-pop offices or fly-by-night companies that don't really have this, most do. The cost of doing business nowadays is so tight in the real estate industry that a lot of companies looked at ways—just like airlines and everybody else—to help cushion that discrepancy in the bottom line.

The state of Illinois required that all documents be held for a certain period in paper. Now they need to be kept electronically. Administrative fees go towards the state of Illinois document holding fee that they do require. A lot of other states have that as well. This document prep fee or admin fee is negotiable, just like the commission.

Total Closing Costs

To give you a ballpark on what you can expect when you sell your home, we add up our net sheet. To sell your home of $300,000, you're going to have about $21,000 in closing costs. You then get the resulting estimated net proceeds, which is the amount of money that will be wired into your bank account. For our example, this is about $278,000. Of course, remember that this number can be plus or minus. A few things can vary, and there's always room for error.

I hope this gave you some insight into selling your home in today's market and what the true cost is. This gives you a good idea of the bottom line net figure you can expect to walk away with at the closing table. And if you’d like to download my 225 steps to selling your home, make sure to click the link. If you have any additional questions, make sure to reach out to me and I’ll be happy to help you with the process.

For more information on Chicago's best suburban communities, make sure to subscribe to my channel. And if you're thinking about making a move from Illinois to Florida, or Florida to Illinois, I would love to be your go-to real estate broker. I hope to hear from you soon!