Money Image


Marsha, I am ready to put my house on the market and I want to know what my proceeds will be from the sale. How do I figure this out?


The easiest way to estimate the proceeds of your sale is to ask your real estate agent to prepare a seller’s net sheet. Here are items you can expect to see on a seller’s settlement statement.

In Santa Barbara, the agent commissions cost five to six percent of the final purchase price. On an $800,000 home a five percent selling commission is $40,000. It may seem like a big number but it’s a vital service. Your agent directs the process and works diligently to sell your home. The seller’s agent shares this commission with the agent who brings in the buyer.

Here are other costs to expect on a seller’s settlement statement: title and escrow fees (customarily split between buyer and seller), title insurance for owner’s policy, county transfer tax ($1.10 per $1,000 in sales price), government retrofits (if required), home warranties for the buyers (highly recommended), requests for repairs from the buyers, requests for credit from the buyer, and a Natural Hazard Disclosure Statement (state mandated report).

The escrow officer prorates the property taxes, mortgage payments and Home Owner’s Association (HOA) dues up to the day of closing. The seller will receive a credit for any pre-payments. A letter is sent to the mortgage lienholder requesting the loan pay-off amount. That generates more costs: a demand fee, which is the cost to provide a payoff amount to the escrow company, a reconveyance or release fee charged by the lender to reassign ownership back to the seller, and the reconveyance recording fee.

If your home is located in Santa Barbara City, a zoning information report (ZIR) is required. The ZIR charge is the highest in California, $465…but that’s a topic for another article. A good rule of thumb is that settlement costs will be 5.5 percent of the purchase price (not including repairs or credits to the buyer).

As an aside to the closing costs discussion I want to point out that home sellers and buyers can thank the National Association of Realtors and, in California, the California Association of Realtors for working hard to keep transfer costs down. Our federal and state legislators are constantly trying to add more and more point of sale fees to real estate transactions. They look at the big pot of money in a transaction and want more and more of it. As these costs go up, home ownership affordability goes down. It is your money and the realtors fight hard to keep costs down.

Once commissions, transactional costs and all liens are paid, the seller will receive the proceeds of the transaction. Like death and taxes, real estate closing costs are simply a fact of life.

Leave a Comment