Rick Dulai

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Seller’s Net Sheet Explained

May 9, 2020 By Rick

A seller’s net sheet breaks down all of the debits and credits based on the accepted purchase price for the property. Let’s take a look at the credits first (the easy part).

Credits

The first thing on the seller’s net sheet is the selling price or the agreed purchase price. In this example I will use $400,000.00 as the selling price. This is the first line item for the credit column.

The second item on the seller’s net sheet is the prorated taxes. In Michigan we pay our taxes in advance. The summer tax covers from July 1st of this year to June 30th of next year. The winter tax covers from December 1st of this year to November 30th of next year. Buyers that are closing in August are paying the seller for 11 months of summer taxes and 4 months of winter taxes. Here’s another example if you are closing in May. The buyer will pay the seller for 1 month of summer taxes and 6 months of winter taxes.

The third item that could be on there is prorated association dues.

Any amounts that were paid by the seller for annual dues or monthly dues will be pro-rated back to the seller. As a result, this turns into a charge to the buyer.

The fourth item that might come up is prorated trash collection fees. The seller is entitled to the prorated amount in municipalities where trash collection is a monthly charge.

That is really it for the credit side! Pretty simple, huh?

Debits

This is where things can get a little complicated. You can not avoid this if you just take your time and follow the math.

Mortgage Pay-offs

Mortgage Pay-offs are first lien position amounts owed that are registered with the county. They are due on the sale of the property.

Assessments

Any assessments from the city, county or state will be paid out of the proceeds of the sale.

Title Insurance Policy

The seller must pay for an insurance policy from the title company. This is to insure the title is clean when delivered to the buyer.

Real Estate Transfer Tax

In Michigan, the seller is responsible to pay the real estate transfer tax unless otherwise agreed between both parties. This tax has two parts. 1) State transfer tax of $3.75 for every $500 of value transferred and 2) County tax of $0.55 for every $500 of value transferred.

Discharge of Mortgage

If you have a current mortgage on your home, when you sell it, there will be a discharge fee recorded with the county. The cost typically falls around $36.00.

Administrative Fees

The listing broker charges this fee to cover administrative costs associated with the sale of your home. This fee is separate from any commissions.

Home Warranty

If the seller has agreed to provide a home warranty to the buyer, then there will be a line item debit for that cost. This can range from $300 to $1,000 depending on the type of warranty and coverage.

Commission

The seller is paying the entire commission amount. The listing brokerage pays a specified amount to the selling brokerage out of the amount collected by the listing brokerage. So if the listing broke charged 7% to list the house and advertised a %3 commission to a potential buyer’s broker/agent, then the listing broker would collect the remaining 4% as their fee for marketing the home for sale. Commissions are completely negotiable!

Seller Concessions

These are previously agreed upon amounts the seller is willing to pay towards the buyer’s closing costs and pro-rations. In general, on conventional loans this amount cannot exceed 6% of the purchase price. In some cases it is an amount “up to”. If all of the costs are covered within the agreed upon amount, the remainder comes back to the seller, .

Miscellaneous

Pest Inspection fees, City Certification fees, Delinquent taxes, etc are all types of debits to the seller.

As a result, when we look at all of the credits and debits, we can estimate (based on the offer price) how much the seller will put NET in their pockets.

I always like to show my sellers several price scenarios.

A) This helps them understand if their list price makes sense or not.

B) This helps them negotiate with better information (knowing their bottom-line).

Visit my YouTube Channel for more Tips and Information when comes to selling your home!

Filed Under: Sellers Tagged With: commissions, listing, net sheet, pay-off amount, property taxes, purchase price, real estate, remax, remax metropolitan, rick dulai, sell my home, sell your home, seller, seller net sheet, sellers, selling, title insurance

What’s a Pre-listing Home Inspection?

May 6, 2020 By Rick

Getting a pre-listing home inspection is probably my #1 tip for homeowners looking to sell their homes (whether with a professional or on their own). Hire a home inspector to perform a full home inspection just like the buyer will do. Why? Well there are several reasons:

  1. You can identify repairs and maintenance issues. This will give you an opportunity to take care of these items before you go on the market. This can help improve showings too as buyers are smart and savvy and look at everything. When buyers see that a homeowner is proactively addressing issues, they are much more confident in their purchase.
  2. You can eliminate a buyer’s negotiating power. Now keep in mind that no two home inspectors are alike. Also, the same inspector may find different issues on the same property during different inspections. However, I would guess that 99% of the issues that would come up during a buyer’s inspection would have been found and taken care of with a pre-listing inspection. This is very helpful when negotiating because buyer’s will exaggerate the cost of a repair. For example, if you found a leak in the roof due to bad flashing around the chimney, you might get it fixed for a few hundred dollars. The buyer might try to get a new roof out of you!
  3. You can have peace of mind. Knowing what issues may or may not exist in your home will give you peace of mind. If you find something problematic, you now have an opportunity to fix it. Knowing your house is taken care of and you and your family are safe is worth a few hundred bucks for the inspection. If you find that there are no major problems, you can be comfortable and confident in showing your home to potential buyers.

I am certain that a pre-listing home inspection will help you get top dollar for your home. Spending about $400 upfront can easily help you net much more than that with an accepted offer.

Don’t forget to visit my YouTube Channel for or Tips and information about buying or selling your next home!

Schedule a Free Home Selling Strategy Call

Filed Under: Sellers Tagged With: buyer, buyers, home, home inspection, home inspector, homes, house, inspection, negotiating, pre-listing, sell home, sell your home, seller, sellers, selling

7 Reasons to Sell in Winter

December 27, 2011 By Rick

This quick little video gives you some counter-intuitive information on why the winter really is a good time to get on the market if you’re ready!

As always, I am willing and able to help. So don’t hesitate to contact me below if you are looking for a professional with a TOTALLY different approach that is based on facts and numbers not tradition and the status quo!

Filed Under: Resources Tagged With: agent, home, homes, house, houses, listing, listings, macomb, oakland, real estate, realtor, residential, rochester, rochester hills, sellers, selling, shelby twp, sterling heights, troy, videos

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