Have you ever heard the expression “you have to spend money to make money?” It’s one of those sayings that’s so common, it’s almost become a cliche – but it certainly still holds water when it comes to real estate.
In fact, for homesellers, there are still a number of closing costs associated with selling your home.
While every real estate transaction is unique, there are certain closing costs that home sellers in the Chicagoland area should prepare for. Here are a few key expenses to keep in mind as you prepare to close on the sale of your home:
- Real Estate Broker’s Commission
The broker’s commission typically averages around 6% of the sale price, though you will find fees that are higher or lower. This cut of the sales price goes toward paying the listing brokerage’s fees, as well as the “cooperating commission,” the fee that goes to the brokerage and agent representing the buyer.
- Proration of Taxes
At closing, sellers are typically liable for any unpaid utility expenses and assessments up to the date of closing, as well as providing a credit for current taxes that are not yet paid or due. In Cook County, IL, for example, property taxes are billed in arrears, in two installments during the year. So, in most cases, the seller will provide a credit for the amount of property taxes accrued during the time they owned the house during a calendar year, which the new owner will ultimately be responsible for paying at a later date. This credit is usually negotiable, and determined using a formula.
- Transfer Taxes and Stamps
When you buy or sell real property, there are taxes to be paid, including state, county, and city taxes. Broadly speaking, sellers are typically responsible for the state and county transfer taxes; most real estate pros agree that sellers should budget roughlyl $1.50 per $1000 of the sale price for deals in Cook County. In Chicago, sellers should also prepare for tax stamps, $3.00 per $1000 of the sale price.
- Title Fees
Sellers generally purchase title insurance for the buyer as a sign of good faith; this acts as a guarantee that the purchaser will be getting a clear title to the property, free of liens or other legal attachments that could upend the sale. Generally, the greater the sale price of the property, the higher the title fees will be. Real estate agents may tell you that a rule of thumb is to prepare to pay $1130 for houses valued up to $100,000, then $20 for each additional $10000.
- Escrow Fees
Escrow fees will vary from transaction to transaction, depending upon the sales price of the home.
- Attorney’s Fees
In Chicago, and the state of Illinois more generally, attorneys are an absolutely essential part of the closing process, taking care of crucial paperwork, leading contract negotiations, coordinating the closing process, and bringing indispensable insight and knowledge to the table.
This list is just to get you started; it’s far from from comprehensive. And, as we mentioned earlier, it’s important to bear in mind that every real estate transaction will be unique, depending on any number of factors, from the people involved to the nuances around the property being bought or sold.
It’s also important to remember that there are many real estate laws unique to Cook County and Chicago, making the buying and selling process here distinct. Connecting with a real estate firm that brings expertise, insight, and long-term connections throughout Chicago’s real estate, finance, and insurance industries could make all the difference when the time comes to buy or sell.
That’s where the Gunderson Law Firm comes in! Our attorneys and staff specialize in helping individuals and businesses throughout Illinois with real estate transactions insightfully, promptly, and professionally. Drop us a line or give us a call to arrange your free initial consultation.