Gross vs. Net: 4 Basic Home Selling Costs

When speaking to a client trying to negotiate a closing price, sometimes they may have an inflated idea of the value of the home placed there by a Realtor. Do show them all the Market information on the property, but that alone may not be proof enough for them. You must know how to explain gross vs. net to them, so they can understand the true value of their home. There are four main costs when it comes to selling property, regardless of whether it is sold to you or through a Realtor.
The first is the Marketing Costs. Realtors normally charge six to seven percent commission for selling the property. Most of that goes to marketing and other ways of getting the property noticed by potentials. So, this will have to be factored into the total cost no matter what, if want their home to sell at all. The primary reason for properties that are listed without a Realtor that fail to sell is poor marketing.
The second factor is Buyer Discounts. Buyers hardly ever pay full price when they settle on a transaction. So, have real estate data from the local area with average ranges of listing and asking prices prepared to show them. Then, have them deduct the average spread percentage from their asking price.
The third of the four main property selling costs is Closing Cost. These may differ from place to place. Show your seller proof of the closing costs in their area and have them subtract that percentage from their asking price, as well, because you will be taking care of all of those closing costs for them.
Finally, the fourth cost is repairs. Waiting months for them to pay and get these completed is in no one’s best interest and is a waste of time. The best thing to do is for you to handle them. The repairs will have to be paid for no matter what. You can have it done for them in a much more timely manner, which is a convenience for them because then they don’t have to deal with it and is a convenience for you because you don’t have to wait all that time for them to get it done . Just have them subtract deferred maintenance costs from their selling price, so that you can pay for the fixes.
Explaining these costs to them will help them understand that it doesn’t matter who sells their house because it will still end up costing the same either way. Also, you’re saving them their potentially highest costs, holding costs. If it takes a realtor nine months to sell the property that’s nine more months of utility, mortgage, taxes, insurance, and such that they would have to keep paying as holding costs.

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