Home Selling in Schaumburg>Question Details

Abigail Buss…, Home Buyer in Oak Park, IL

I'm thinking of selling my condo/townhouse that I have paid off - Can someone explain/breakdown in detail what my closing costs will be???

Asked by Abigail Bussard, Oak Park, IL Fri Jan 20, 2012

Can someone please breakdown IN DETAIL what my closing costs will be with selling a townhome I have paid off? So far, I've gotten different answers from different people who I've interviewed to sell my home.........shouldn't an agent know before I sell it exactly what needs to be paid and why? I've also confused about the whole having to pay taxes through the end of the year thing..........can anyone help? Thanks!

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Chris: You "pad" only the portion of the tax bill that is unknown. For example: If you receive your tax bill for 2011 but you close some time in 2012, then the proration is 100% of the 2011 bill (because you know exactly what the charge is) and then add the inflated amount only for the portion of 2012 you still own the property. The reason for the pad in the first place is because taxes usually increase and each county has its own tax cap. The pad is to cover the amount of possible increases in that county.

If you close 2012 before you know what your 2011 tax bill is, then pad will be based on the last known complete tax bill - 2010 - and everything else will include the padded amount.
0 votes Thank Flag Link Fri Jan 20, 2012
Chris:

The normal area contract 'pads' the tax bill by either 5 or 10% depending on the tax year. Some years we are being reassessed. Those would be the years where you would 'pad' the tax bill for the buyer by 10%. If you taxes come in higher than the 10% - tough. The buyer accepts the 10% pad. Under 10%, well then you don't make out so well.

You're real estate attorney will do all this for you also. They charge a flat fee for a closing.

Lyn Sims
(847)230-7324
http://www.LynSims.net
RE/MAX Suburban
0 votes Thank Flag Link Fri Jan 20, 2012
Chris:

That is one of the more confusing aspects of selling your home especially if it is in COOK County. Taxes are paid in arrears. So, when you purchased the condo the seller gave you credit for taxes up to & including the closing date. When the bill came due when you were the owner, you were given credit (paid) for those taxes. It's confusing because we just finished paying 2010 taxes even though it's 2011.

If you close TODAY, you will owe taxes for 2011 (all 12 months) plus 20 days in January 2012.

I've given you a link to all the possible closing costs for the seller but you may not be liable for some of them.

You are correct that some people cannot explain these tax situations to sellers or to buyers. I think you need to interview someone that does! Since most sellers don't do this everyday like we do, the nuances of how it's done is often forgotten until you sell your next home!

I hope this answered your question!

Lyn Sims
http://www.LynSims.net
RE/MAX Suburban
(847)230-7324
0 votes Thank Flag Link Fri Jan 20, 2012
I think you're misunderstanding what we are saying. Please note that I started my last answer with: "If you don't know what your 2011 taxes are before you close..."

Everything you said is correct. If you know your 2011 tax bill, then nothing gets added to that. It's figured at 100%. And the prorated 2012 taxes are figured at a rate of 105% or 110% of the 2011 tax bill.
0 votes Thank Flag Link Fri Jan 20, 2012
If I know exactly what my 2011 tax bill is - why would I add 10% to that bill? Here's my rationale - lets say my 2011 taxes are $3000 and the closing is April 1st., 2012:

I haven't paid my 2011 taxes yet, obviously.....but I know they are $3000, so I bring that to the closing table to cover that year in full. Now, the buyer takes possession of the property April 1st, so I'm responsible for 3 full months of 2012, since the home is still mine until April. I don't know what the increase will be in 2012 - so I add 5-10% (which based on 2011 would be $250 x 3mo. = $750 + 10% = $850).

I understand paying an extra 10% on the 3 months in 2012 to account for an unknown 2012 increase - I don't understand paying an extra 10% on a 2011 tax bill where I already know the exact amount. Am I missing something?

Thanks for all the answers!
0 votes Thank Flag Link Fri Jan 20, 2012
Chris-

If you don't know what your 2011 taxes are before you close, then yes, you add the 10% of the last tax bill on to that. The way the contract is worded, I believe 2012 taxes are the same thing, but NOT an ADDITIONAL 10%, although the lawyers could make this change after you're under contract. But while we're on the subject: don't just accept 10% without negotiating. That's crazy. Try to do no more than 5%.
0 votes Thank Flag Link Fri Jan 20, 2012
To answer your tax question----
the 2011 full year amount will be out in about October 2012, on the second installment.
Any closing before the full year taxes are known will be at the 110% or maybe 105% proration for the 2011 and 2012 unpaid days.
Yes, they are confusing.
0 votes Thank Flag Link Fri Jan 20, 2012
Chris,
Your final costs will depend on the gross sale price, that's why some agents couldn't give you specific numbers.
Also, you're responsible for paying property taxes for the whole time you are being an owner, which means until the actual closing date. Property taxes for 2011 are going to be due in 2012, just like your income tax. Therefore
if you close, let's say March 30 this year , you would need to pay the property tax for the whole 2011 and for the period of Jan/01/2012-March/30/2012.
All of the above doesn't have anything to do with the fact that your town home is paid off or not.

Good luck and let me know if I can further assist you,
Dorothy Zastrow
630-730-9964
0 votes Thank Flag Link Fri Jan 20, 2012
Glad to help, Chris. Let me start off by explaining that your closing costs are based on the sales price and when the closing takes place so it isn't possible for me to give you exact figures right now. Agents know what has to be paid and why but not exact dollar amounts. Those figures are compiled by the Title Company. You are going to be paying:
- Title Company fees. Attorneys use their preferred title company and the fees vary and are based on selling
price.
- Attorney fees. Each attorney has their own.
- State and County Transfer Taxes. That's $1.50 per $1,000 of the sales price.
- Survey. This is required only if you own any land with your townhouse. A survey dated within 6 months of
the closing is to reflect the boundaries of the property owned.
- Local Transfer Taxes. Schaumburg charges $1.00 per $1,000 of the sales price. This is simply revenue to
the Village.
- Marketing Fee / Commission. There is no set fee so it depends on each agent or their office. Again, based
on sales price.
- Condo Documents. Your buyer is entitled to review the condo bylaws and rules and regulations so they can
make sure they will abide by them before they agree to consummate their purchase. Each association has t
their own fees associated with producing these documents. Typically each association or management
company also charges a fee to compile a budget sheet or paid assessment letter that is given to the
attorneys. This letter tells the buyer the financial health of the complex so the buyer knows if he/she is buying
in a complex that is sound financially or if it's headed towards trouble. The owner (you) is responsible to pay
association fees through the day of closing. If you close on the 20th of the month, you pay the 1st 20 days of
association fees and the buyer pays the rest of the month. (Sometimes the buyers attorney has the seller pay
for the entire month just to keep the numbers simple.)
- The buyer may ask for a termite or wood boring infestation test. Prices vary depending on what company is
called to do the test. Somewhere around $100.
- The buyer may ask for a home warranty. Prices vary. Somewhere around $425.
- There are state fees that are charged for each mortgage on the property. $68 per mortgage.
- Now for property taxes. Property taxes are paid in arrears. That means you pay this month for last month.
This year's tax bill was for last year's taxes. The owner (you) are responsible for payment of taxes for the
time you own the property so you are responsible for taxes through the day of closing. You don't necessarily
pay through the end of the year - you pay through the day of closing. For example: If you close your sale on
June 1st 2012 you owe taxes for 2011 and January through June 1, 2012. The amount of money you have to
give is calculated according to the last known tax bill so the dollar amount you pay depends on when the last
tax bill came out.
- Misc. fees can be added for courier services and other things that can come up.

The figures are all calculated very specifically based on the sales price and the title company breaks down the costs to the penny! The "bottom line" figures aren't known usually until a day or two before closing because of this specific breakdown. Every agent you have in your home should provide you with an ESTIMATED NET PROCEEDS list of these costs. What you get from the agents will not match because the agents have to use estimates.

I hope this helps you understand the process a bit more. If you aren't understanding the agents you've invited to give you estimates then you need another agent! Open, clear and honest communication is KEY to a successful transaction! If you would like to talk to me, please call 630-291-4700

Have a beautiful, warm day!
Janet Baier
RE/MAX Destiny
0 votes Thank Flag Link Fri Jan 20, 2012
Thanks - quick question though? Let's say the "tax percentage rise" agreed on the contract is 110% - I only pay that extra 10% on the prorated credit I'm giving them from Jan 1, 2012 - to when they close, correct? That extra 10% wouldn't apply to 2011 taxes right? If the taxes were $4000 last year, I'd give them $4000 + 110% of 3 months of 2012 taxes, based on 2011 taxes, right? Sorry it's confusing....
0 votes Thank Flag Link Fri Jan 20, 2012
I'm doing this on my mobile device, so I'm not putting any numbers in. If you want me to give you specific numbers, call me so I can get more details from you.

-You will have title insurance. Cost depends on which company you use and how much your home sells for.

-You will have the realtor commission. Cost depends on what you negotiate with your agent and how much the home sells for.

-You will be paying property taxes up to the date of closing. Since taxes are done on arrears (we pay for last years taxes the following year), you will be paying for all of 2011 taxes and part of 2012 taxes through the date of closing. So if you sell in 2012 before 2011 taxes are due, you will credit over a years worth of property taxes to the buyer at closing. If we don't know the taxes (we won't know 2012 taxes), they well be estimated, and the percentage rise is a negotiable point on the contact.

-Survey, usually around 400

-Attorney, negotiable, variable

-Real estate transfer taxes. State and county have their fees, cities sometimes do as well. This is usually in terms of hundreds of dollars,not a huge hardship.

-Various title company fees. Expect to get nickel and dimed. These include room fees, document recording fees, wire transfer fees, courier fees, etc. They will add up to hundreds of dollars.

Contract very negotiable points:
-Well/septic tests, if applicable
-termite inspection
-home warranty (usually a few hundred)
-buyer closing costs (up to 3%)
-buyer requested repairs or upgrades
0 votes Thank Flag Link Fri Jan 20, 2012
The seller gets to approxiamately pay for:

Title Insurance $1200
Prorated 2011 and 2012 unpaid taxes at at about 110% of the 2010 total
Your attorney $350?
Your association docs $250
Broker commissions(call me for specifics)
Transfer tax to Village, County and State is $2.50 for each thousand of the sales price
Misc. $150

So, since it is depending on the sale price and some variables, it is something we could try to crunch out more accurately after we do a market analysis.

I have been a Schaumburg Realtor for 27 years and can help you further if you wish.

Bob Brandt
847-230-7303
Web Reference: http://www.realtybob.com
0 votes Thank Flag Link Fri Jan 20, 2012
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