If you are struggling financially and want to get rid of your home so you can downsize, you may not even care if you make a profit on the sale. You will, however, probably want to at least break even, though, and here are several steps you should take to make sure you can do this when selling your home.
Find out exactly how much you owe
To break even when selling your house, you will need to sell it for a price that is high enough to cover the amount you owe on your mortgage, the real estate commissions, and any closing costs you may incur as a result of selling your house. A good place to start, therefore, is by finding out how much you owe on your mortgage. You can do this by calling your lender, looking at your statements, or logging into your online account. Once you know this, you will at least know how much you will need to pay to your lender at closing.
Calculate the approximate commission and closing costs
Next, you may want to talk to a real estate agent about commission rates. The normal rates agents charge is between 5% to 7%, but this can vary. The agent you want to hire will tell you the rate he or she will charge, and this will help you learn approximately how much you will have to pay for commissions.
For example, if you owe $160,000 on your house, you will know that you probably need to sell it for at least $170,000. If the agent charges a 6% commission, the commission you would pay at $170,000 would be $10,200. As you can see, selling for $170,000 would not be a high enough price, because you would not be able to break even. Selling at $180,000 would result in a commission of $10,800, which would completely cover the commissions and the principle balance of your loan.
You should also talk to your agent about the closing costs you will have to pay, and you should figure these in too. In most cases, the seller of a house will have to pay at least $2,000 in closing costs, and this covers prorated taxes and title work.
With this information, you could determine the best price to ask for your home so that you could break even on the sale. If you have further questions about this, talk to your agent like those at ERA Kings Bay Realty.Share