Demystifying your home selling costs

By David Wilkening, Contributing Writer

REGION – When selling your home in Massachusetts, what you will pay the realtor might be the initial expense that comes to mind. Some industry veterans say, however, the first cost concern is something else.

“It’s usually the transfer tax that surprises them. A lot of people don’t think about it and don’t know about it,” said longtime realtor Bill Gassett of RE/MAX Executive Realty, who has sold thousands of homes since 1986. One reason for that: the state’s tax is often $4.56 per thousand dollars of the selling price. “So if a house sells for $500,000, it quickly adds up,” said Gassett, who has often been among the top ten RE/MAX sellers in New England and was number one in the state of Massachusetts in transactions in 2013.

There’s general agreement among those in the business that the major concern of most sellers is just how much it will cost to sell their home. It can be confusing,  mysterious, even mystifying. The costs explained here are based on selling a home on an “as is” basis. That is, it does not include any costs of repairs and improvements to get a home prepared for the market. 

Resolving the mystery

Gassett, whose company is based in Hopkinton, said his long-standing practice is to remove the mystery of home-selling costs. “Going over all expenses is a regular part of my presentation when interviewing a seller. Part of being a great agent is doing that so there are no surprises. Nobody likes financial surprises,” he said.

It’s also not surprising that the cost of homes in Massachusetts surpasses many other states in their steadily-rising prices. The median price of a Massachusetts home has risen to $514,000, a 27.4% increase from $420,000 just two years ago.

That obviously means more money generated through the tax stamp, which is income given to the registry of deeds where a home is located and is turned over to the Commonwealth of Massachusetts Department of Revenue. “Most of Massachusetts is taxed at $4.56 per thousand dollars, including Middlesex, Worcester and Norfolk Counties,” Gassett explained. “It should be noted that in Barnstable County the tax rate is $5.70 per thousand so the cost involved with selling a property is slightly higher in that district.” Dukes and Nantucket Counties also charge an additional 2% of the sales price that gets forwarded to the local land bank commission.

Commissions vary

Real estate commissions are varied when selling a home. They are not set in stone and can be negotiated with different firms. Individual realtors in one company might also have different rates. “Generally speaking, most full-service real estate companies will charge anywhere from 4% to 7% commission with the vast majority falling between 5% to 6%,” Gassett said. A discount brokerage often will charge less but not offer the same services. The average real estate commission in the U.S. in 2020 was 4.94%, according to research firm RealTrends. Real estate fees are often split evenly by buyer and seller agents, but contracts vary, according to Massachusetts realtors.

Other typical costs

Other typical home selling expenses also are generally summarized by Gassett as attorney fees, Title V (septic system inspection) expenses, costs for state-mandated carbon monoxide detectors, new deeds and miscellaneous costs. A real estate attorney in a home sale is the next highest cost for sellers. It’s against the law for a realtor to give legal advice. Typical expenses for an attorney are in the ballpark of $300 to $1500―depending on the complexity of the contract and personal attendance. Gassett recommends hiring someone. “The expense of having a competent attorney representing your interests is cheap in comparison to dealing with the cost of problems that could arise without proper representation,” he suggested.

The Massachusetts Title V expense is one every seller in the state has to pay unless they are serviced by public sewers. That is expected to cost about $800 for an inspection but can be higher if the septic tank or distribution box is in an area that is difficult to service.

Carbon monoxide detectors are the seller’s responsibility in Massachusetts as well.  These inspections are done by local fire departments. The charge is typically around $25 to $100 (and could be higher if more equipment is required).

The state also requires a new deed prepared for the buyer. The preparation of a new deed is usually $100 to $150 and is done by the attorney representing the seller or possibly the lender’s lawyer. There will also be some minor miscellaneous expenses for mailing, filing fees, and other costs that will be added to settlement statements at the closing. The total of these expenses will usually amount to a couple hundred dollars, according to Gassett.

Other miscellaneous fees can come up. Buyers are generally the ones paying appraisal fees that determine current market value, to name one. But that cost, that generally ranges from $450 to $650, may at times be paid by the seller. That can happen when an appraisal of value is disputed by a lender, for example, and a seller is anxious to complete a deal. 

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