Home selling practices vary from state to state. However, one common item is that there are costs involved when selling a home. Sellers often forget about, or do not realize the cost of selling their home. If you’re looking to sell your Michigan house, keep reading for what costs to expect.
Any Michigan investor has noticed that housing inventories are slowly rising up. Many urban areas in the state, especially Detroit, are recovering from years of blight which brings a lot of opportunity for flippers to make a profit on them. However, this can be quite a challenge for the average seller to list their residential property, since they’ll have to compete with newly flipped/renovated homes.
FEES AND OTHER COSTS TO EXPECT WHEN SELLING A HOME IN MICHIGAN
If you’re looking to sell your home quickly, and earn top dollar, it would be in your best interest to address any necessary repairs or renovations that might be needed. The average out-of-pocket expenses to expect are 10-15% of the property’s sales price. However, it’s important to remember that the cost of fixing up your property, to help the sale, could reduce your ROI…Return on Investment. You’ll want to make sure you’re doing necessary repairs, to help sell the house, and know how they affect your net profit. Sometimes repairs are needed, just to help the property sell, without looking at the ROI.
In this day and age, buyers are more attentive to the foundation and overall structure of a home they’re planning to purchase. Everything from the roof, windows, foundation, plumbing, electrical and heating systems are checked out. You’ll want to take into account the condition of these items, before you put a price on your house. The condition of these items will play into any negotiating on the final sales price.
Michigan weather can be quite humid in the summer, and quite cold in the winter. It would be best to invest in your home’s HVAC system and the state of your windows when looking into repairs or improvements.
When selling your house, you will need to purchase a homeowner’s title policy. Providing the owner’s policy lets the buyer know the title to the property is free and clear. There will also be recording fees, and other possible fees. On average, plan on closing fees to be 3-4% of the sales price. Sometimes, you may be able to negotiate the buyer paying these fees.
Property taxes, capital gain taxes and transfer taxes are some additional expenses to expect when you sell a house. The municipal and county will charge a transfer tax, which is $8.60 per $1,000 of the sales price. Example, if the sales price is $150,000, you’d pay $1,290 in transfer taxes. You’ll have to pay any property taxes, not yet paid during your ownership. The transfer and any unpaid property taxes need to be paid at closing.
You could have capital gains tax, if you are selling for more than your purchased price. If you have capital gains taxes, they’ll need to be paid when you complete your tax return. After the home has been sold, you may be required to claim capital gains tax on the profit you made over the purchase price. If you lived in the house, as your primary residence, you’ll have a $250,000 threshold on the profit, before you would need to pay capital gains. If it’s an investment property, all the gain may be subject to full capital gains tax. You’ll want to speak with your accountant, or CPA, for ways to possibly minimize your capital gains tax.
SIMPLE TIPS TO MAXIMIZE YOUR PROFITS
Time it right
With proper due diligence, the time of year you list your property for sale may determine how fast you can expect to sell it. The Michigan real estate market, especially in Detroit, picks up in the Spring time. Right around April 1st, people start getting the itch to look at houses. The Winter is over, and the weather is warming up, along with the market. This momentum carries through the Summer. You can still have success during other seasons. No matter when you are selling, know the market, and know your costs.
Work with LOCAL real estate professionals
In most states, including Michigan, seller and buyer agent commissions are usually a combined 6% of the sales price. The seller is usually responsible for both commissions. Sure, you could possibly negotiate lower commissions, or get the buyer to cover some, but you’ll still be paying something.
To put this into context, for a home that’s listed for $150,000, you might spend $9,000 just on realtor fees alone. That’s some hefty fee. Realtors can be helpful, but what if you could get the professional service you need , and save the commission fees? That means more money stays in your pocket.
That’s why it’s important to work with the right real estate professionals – and SellUsHomes is your best bet. Why? You can enjoy the ease of selling your home AS IS, no matter the season, or the property’s condition, without a realtor fee. Our team of realtors and real estate professionals are well-versed in the Detroit and Michigan real estate market. To get the most out of your sale, contact us at (734) 224-5947 or reach out to us via email at firstname.lastname@example.org.