FOR SALE BY OWNER / QUICK GUIDE TO SUCCESS- PART II

Step Two: Determine Your Costs. Your entire budget for selling your home will consist of two sets of costs, costs of preparation and marketing and closing costs. Costs of preparation and marketing will be paid by the Seller in anticipation of the sale and usually "outside of the closing" - meaning that these fees are paid in advance and will not appear on the settlement statement. Closing costs are the fees that will be paid at the time of closing and will appear on the settlement statement.

A. Preparation and Marketing Costs: Every FSBO Seller should expect the following costs in preparing and marketing their property for sale:

Appraisal: As discussed in part one of this series, in determining the value of the home an appraisal is a must. Expect to pay $200 - $400 for a professional; appraisal.

On-line Services: Different web sites offer on-line marketing opportunities at little or no cost. One of the most professional services available for on-line marketing and a fantastic resource for Selling your own home in Longmeadow and East Longmeadow can be found at LongmeadowBiz.com. For $129 LongmeadowBiz will provide you with a great web marketing tool with some unique features.

Another great resource for marketing your property can be found at Craig's List Talk to Jim Moran at LongmeadowBiz- (413) 567-9428 if you want a classy appearance on Craig’s List (see example).

Listing Only Services: The Multiple Listing Service (MLS) is the place where homes are advertised to Realtors and their Buyers. There are a couple of companies that provide listing only services in Western Massachusetts. They offer flat fee MLS services ranging from less than $100 to $325. Carnevale Real Estate in Wilbraham, MA offers a special rate of $79 for 3 months. Call Tina at (413) 262-3800 and mention LongmeadowBiz to get this special rate.

Local Newspaper Ads: It is also a good idea to advertise the home and any open houses that you wish to have in the local paper during the week and on Sundays. Prices will vary.

Smoke Detector / Carbon Monoxide Detector Certificates: Every home / unit, sold for residential purposes in Massachusetts must be accompanied by a smoke detector certificate issued by the fire department from the City or Town in which the property lies. The purpose of the certificate is to ensure that the home being sold has adequate smoke and carbon monoxide detectors. A Seller should contact their local fire department to determine how many and what type of detector is needed for each living area of the home so that the home "passes" when it is inspected. The fee is typically $25- $50 per living unit, i.e. if you are selling a three family home in some Cities or Towns you may have to purchase three certificates.

Additional Costs: Additional costs of sale may occur if you have any unusual features to your property such as a septic system, asbestos, lead, underground fuel tanks or any environmental issues on the property. These items may cost thousands of dollars to bring into compliance before a sale is possible. Generally speaking it is in your best interest as a Seller to remove all of the above mentioned issues from the equation before you enter an agreement with a Buyer. You could save thousands of dollars. You should review these issues with your attorney before you list the property for sale.

B. Closing Costs: The closing costs consist of mortgage payoffs, tax stamps, attorney fees, overnight fees, discharge recording fees and discharge tracking fees.

Mortgage and Lien Payoffs: These are the payoffs for the mortgage, equity lines and any other liens that you may have on your home. When reviewing these numbers keep in mind that the interest is always running and that making a payment will not reduce your balance by the entire payment.

Tax Stamps: Tax stamps are a Seller fee that is collected at the registry of deeds at the time of recording. Tax stamps are calculated at $4.56 per $1,000 of the consideration listed on the deed. A deed for $100,000 would require tax stamps of $456.

Attorney Fees: Expect to pay a little more for attorney fees when selling your own home. I charge $200 more due to the additional time that I will spend with my clients. A typical fee for FSBO representation is $800.

Overnight Fees: Every mortgage and lien must be paid to the day (remember that interest is running) and such payments will be mailed overnight to the creditor. Overnight fees average $20 each.

Discharge Recording: Seller must pay the cost of recording discharges for all mortgages and liens that are on record. This is a one page document from the creditor that indicates a debt is satisfied and removes the lien. Each discharge or release costs $75 to record.

Discharge Tracking: In Massachusetts it is common for the Buyer's attorney to charge $75 per mortgage or lien to track the discharge or release in order to insure that the title is cleared.

Adjustments: Taxes, water and sewer, trash, condo, homeowner's association, fuel and other miscellaneous municipal charges as may apply are all adjusted to the day of the closing. A Seller who has prepaid for an item such as taxes will be reimbursed for the period of time that has been prepaid. Any service that is billed in arrears must be paid by the Seller and will be credited to the Buyer through the day of the closing. In Massachusetts adjustments are calculated so that the Buyer pays for the day of the closing. This usually means that there will be a swing of several hundred dollars for adjustments in the Seller's

Following is an example of the typical costs for a $250,000 sale:

$250,000 sale price
- 1st mortgage payoff of $100,000
- Equity line payoff of $45,000
- Tax Stamps ($4.56 per thousand x 250) = $1140
- Attorney Fee $800
- Overnight Fees ($20 each x2) = $40
- Discharge recording fee ($75 each x 2) = $150
- Discharge Tracking Fee ($75 each x 2) = $150

Net Proceeds = $102,720 +/- adjustments for taxes, water and sewer, etc

Previous posts: Massachusetts For Sale By Owner / Quick Guide to Success- Part I

Nyles Courchesne is an attorney specializing in real estate for the past 15 years. He is a partner with the law offices of Peskin, Courchesne & Allen, P.C., located at 101 State Street, Suite 301, Springfield, MA 01103 - ph. 413.734.1002 - fax 413.734.1002 email: nlc@pcalaw.net and on the web: www.pcalaw.net

Disclaimer: In accordance with rules established by the Supreme Judicial Court of Massachusetts, this web site / blog must be labeled "advertising." It is designed to provide general information for clients, prospective clients and friends of mine and my law firm and should not be construed as legal advice, or legal opinion on any specific facts or circumstances. This web site / blog is designed for general information only. The information presented at this site / blog should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.