No one likes surprises, especially when they impact you financially and especially when you’re selling a home and realizing every dollar spent! While selling hundreds of Massachusetts homes over the last 25+ plus years, we realized that many home owners do not realize all the costs involved with selling a home. The #1 closing cost for Massachusetts home sellers is the Deed Stamps Tax to sell their home.
Below you will find a summary of all the costs for selling a Massachusetts home explained in detail.
When you know all the costs to sell a Massachusetts home you will be well informed and your financial picture in order whether you are buying another home in Massachusetts or out of state or renting.
Massachusetts Excise Tax Stamps
If you live in Massachusetts and are selling a home, there is a tax called the Excise Tax Stamps. Most Massachusetts home sellers do not realize there is a tax on selling a home if they have not done a transaction before.
The cost of this tax for most of Massachusetts, including Middlesex, Norfolk and Bristol County is $4.56 per thousand of dollars of the sales price reported on the Deed.
So for example if you sell your home for $300,000, you would owe the State of Massachusetts $1368.00 ($4.56 x 300). The money paid for the tax stamps is paid to the County Registry of Deeds at the time of closing when the deed is recorded which is then given to the Commonwealth of Massachusetts Department of Revenue.
While most of Massachusetts is taxed at 4.56 per thousand dollars including Middlesex, Bristol and Norfolk Counties, if you are selling a home in Barnstable County the tax rate is $5.70 per thousand The Dukes and Nantucket Counties also charge an additional 2% of the sales price as the local land bank fee. There are some exceptions to paying this Tax Stamp fee and that is if the sale price is nominal consideration of less than $100.00. This type of sale is typically found when homeowners in Massachusetts are divorcing, or a homeowner in Massachusetts is transferring a property to a Trust.
Massachusetts Real Estate Commission
Real Estate commissions are, of course, the biggest expense when selling a home in Massachusetts. Commission rates in Massachusetts can range from 4.5% to 5% with 6% being unusual, of final sales price with each Real Estate Brokerage and/or individual Real Estate Agent having control to negotiate the commission charged to sell your home in Massachusetts. Whatever the final commission you agree upon, half that will be offered to a buyers real estate agent for bringing a ready, willing and able buyer. One of the latest trends is that the listing real estate agent is keeping the large portion of the commission and offering a reduced commission to a buyers agent. There is a clause in the exclusive listing agreement that shows the breakdown of the commission so pay special attention to that. This could impact how long your home stays on the market if your real estate agent isn’t offering the industry standard. Consider this, two homes come on the market that are similarly priced, similar style homes and square footage and condition and the agreed upon commission is 5%. One real estate agent is offering the industry standard of 50% or 2.5% to a buyers agent, the other real estate agent is offering 2% and keeping 3%, which home will the buyers agent be more excited about and which home will the buyers agent find things wrong with? When selling your home in Massachusetts, you want maximum exposure and you want to be on a level playing field so be an informed seller.
The commission is often paid on the final net sales price. So if you have negotiated with a buyer and the buyer needs closing costs paid in order to complete the sales transaction, then the Real Estate Commission should be paid on the final net sales price. So you would want to confirm this with the Real Estate Agent prior to signing the exclusive listing agreement.
Massachusetts Title V/Title Five Septic
If you live in one of the many communities in Norfolk or Bristol County Massachusetts, one of the expenses you will run into, and have to pay for, is the Massachusetts Private Septic – Title V (Title Five) unless, of course, you are tied into town sewer. It is a state law that a Title V must be completed upon the transfer of Real Estate. Interestingly enough, the law doesn’t state WHO is required to test (buyer or seller) but generally it’s a sellers responsibility and since lenders require a passing Title V in order for a buyer to obtain a mortgage.
The cost that you can expect to pay is between $500 – $800 dollars for a Title V inspection and report. The cost could become higher if the septic tank or distribution box are in an area that is difficult to find or get to.
The Title V inspection should also include a charge for pumping the system. A Title V septic inspection is good for two years and can be extended for three years if you pump the system every year during those 3 years so maintenance of the records is crucial. It’s worth noting, that if the system fails, the clock will start on the 2 year rule to fix the system. Since the Title V report is filed with the town with a pass or fail, you will want to have the system inspected prior to listing because the outcome may determine if you can sell or even wish to sell.
Smoke Detector and Carbon Monoxide detector Inspection and Certification
In Massachusetts it is the law that you must have your smoke and carbon monoxide detectors inspected prior to closing. The inspections are done by the local fire department in the town you are located in. The charge for inspecting the smoke and carbon monoxide detectors varies at $25-$50 but is usually $50.00 along with the cost of new detectors.
It’s worth noting that the law is constantly changing as it relates to Smoke and Carbon Detectors so if you are selling a home in Massachusetts, you can plan on having to replace the existing detectors in your home. As part of the service of selling your home in Massachusetts, your Realtor will usually handle the setting up of the inspection with the local Fire Dept. because it usually involves going to the Fire Dept. and filling out the application and paying the fee at that time. Typically the homeowner would be responsible for installation of any new detectors needed.
Since this is mandated by the Commonwealth of Massachusetts, a home can NOT be sold without the Certificate that the Fire Dept. issues.
If you are selling your home in Massachusetts, the way to transfer your property to the new owner is through a Deed (Quitclaim Deed). This Deed is signed and notarized by you as the seller and is then recorded at the Registry of Deeds in the County in which you reside. Your attorney (see attorney fees below) will usually prepare this for you and the cost is typically included in their fee. Legal transfer of a property is not complete until this Deed is recorded.
Every seller should have an attorney to review the documents in a Real Estate transaction. The attorney will review the proposed Purchase & Sale Agreement or draft the Purchase & Sales Agreement. In Massachusetts it is the responsibility of the seller to provide this document. Each attorney (buyer and seller) will review and add any addendums they feel necessary to protect the interests of their client.
Your real estate attorney, in addition to reviewing the offer contract and purchase and sale agreement, will also prepare the new Deed to the buyers, they will attend the closing on your behalf and under Massachusetts Power of Attorney. This is something that you will absolutely love because when you’re moving and on a schedule, every minute counts. Having your attorney attend the closing on your behalf is time saving for you. Of course, if you want to meet the buyers or attend the closing, you certainly can.
You can expect a price tag to range between $500 – $1000 for the representation. But, as with anything, if you have a more complex and time consuming transaction, your attorney may charge you more.
Miscellaneous Costs and Credits
There will also be some miscellaneous charges and expenses that will typically be added to your Closing Disclosure. Some of these fees will be the adjustment of your property taxes, overnight mailing or courier services, wiring expenses, recording your mortgage discharge(s), recording fees for various documents at the Registry of Deeds. You can expect the fees and charges to amount to an additional few hundred dollars.
There may also be a credit if you heat your home by oil. So you will need to call your oil company to come and do a reading and provide you with the paperwork so that you can provide to your attorney or real estate agent to ensure you receive the money.
Selling a home in Massachusetts is pretty straight-forward. It’s important for you to know these costs so that you can plan for your future whether it’s buying a new home or relocating to another state. So use this guide to help you!
The Key to the Dream Realty Group is devoted to making your transaction as smooth as possible. If you are buying or selling in Bellingham, Franklin, Medway, Wrentham, Norfolk, Walpole, Blackstone, Millville, Mendon, Hopedale, Norton, Plainville, Easton, Sharon, Mansfield, Foxboro, Milford, Cumberland, Smithfield, North Smithfield, Burrillville, or Lincoln contact us today at 508 254 8093 or start searching for homes now by visiting here.