Why Selling Your Property Costs You Money!

Whether you sell your house yourself (For Sale By Owner -or- FSBO) or you use a real estate agent to sell your home, you will still have expenses at close of escrow. In normal economic times this is easier to handle because most home owners have some sort of equity in their home that can absorb the costs.

The problem is what if you have little or no equity? Then in order to sell your home you either have to come out of pocket to pay the expenses or will have to wait until you build equity in your home, either through appreciation in your home’s value over time, or by paying down the mortgage balance.

Typical Scenario:

  • House originally purchased at $350,000
  • Mortgage balance $300,000
  • Down Payment – $50,000

So ideally you have $50,000 in equity right?

The answer is….not really. Although financially you can claim $50,000 equity on your Financial Statementer you will most likely get only a portion of that back when you sell your property.

For example:

  • List home for sale at $350,000
  • Accept offer at $335,000
  • Less commissions at 6% of $21,000
  • Less excise tax of 2.28% – $7,638
  • Less closing costs 1% – $3,350
  • Less Mortgage payoff – $300,000

NET PROCEEDS OF SALE – $3,012.

$3,012 is all that is left from $50,000 in equity. The good news is that there are many avenues to keep most or all of that equity. This is where we come in.

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