Lifestyle

The costs of selling your house

  • Boundary survey: Every time a property is conveyed it has to be surveyed. If is a good idea to have this done fairly early on to prevent problems cropping up later

Dear Heather,

I want to sell my house. I know that the seller pays the agent’s commission, which is five per cent, but what other costs can I expect to pay?

Seller

Dear Seller,

That’s a great question and one most sellers tend not to think about until they have an offer on the table. Below, a few costs to consider:

• Real estate commission: The seller will be made aware of the percentage of commission, which will be charged at time of settlement when the sale closes.

• Repairs: Although in Bermuda properties are usually sold ‘as is’, there are some instances when the buyer requests minor repairs or removal. Such things as removal of old oil tanks are the vendor’s responsibility, as are junk items. Some possible repairs may be to fix a balcony railing so that it is safe to move in with small children, or cut down a dangerous tree.

The vendor may also choose to make some improvements to the property being put on the market — clean, tidy and painted is usually my advice. Having the grounds in good order can also increase curb appeal.

• Boundary survey: It is the vendor’s responsibility to give good title to the property and part of this procedure is to make sure the measurements in the deeds marry with the measurements on the ground.

This means that every time a property is conveyed it has to be surveyed.

If it hasn’t been done for many years, there could be encroachments or anomalies to deal with so it is a good idea to have this done fairly early on in the process to prevent problems cropping up later and possibly losing a buyer.

Sometimes a new plan has to be drawn up if the old one is inaccurate or unreadable. This will be charged on top of the survey and staking, but remember the property cannot be conveyed without it.

• Your lawyer’s legal fees: In any real estate transaction it is advisable to have legal representation.

You will need a lawyer to look over the documents on your behalf and discuss any changes, facilitate signatures on the documentation and ensure you keep the keys until the sale has closed.

These costs will be billed to you on a time-and-charge basis.

• Missing deeds: If all the deeds are missing, the property cannot be conveyed.

If a small portion of the deeds are missing, sometimes the lawyers can recreate them however this is time-consuming detailed work and comes at tremendous cost.

• Conveyancing costs: It is likely that your agent will estimate what the legal fees for the conveyance will be in a standard transaction.

If the transaction is difficult or complicated, these could be higher.

Generally, the buyer chooses the conveyancing lawyer, however the costs are usually split between the buyer and the seller.

These are calculated on a sliding scale which correlates with the price of the house.

Remember, these can be higher than quoted if additional work is required to convey the property.

• Stamp duty: Payable on the conveyance of a property and calculated on a sliding scale in direct correlation to the amount paid for the property. It is usually split between the buyer and the seller.

• Land registry: Fees are calculated on a sliding scale. The vendor is responsible for payment however the maximum cost should not exceed $1,300.

• Moving costs: Call around and find out approximate costs and a company that you feel comfortable working with. They often have to be booked well in advance.

• Mortgage payoff: Some sellers have a mortgage outstanding on the property. Some mortgages have a notification process if you intend to terminate, some have a payoff figure; your loan officer should be able to give you the figures on this if it applies.

Some older loans still require the borrower (in this case the seller) to pay a percentage of the loan if it is paid off in full prior to the full expiration of the mortgage term.

In some instances, the prepayment penalty can be avoided or waived by the lender. You should inquire as to the policy of the particular lending institution.

• Outstanding taxes, etc: If there are any outstanding land tax or maintenance fees on the property, these will come out of the proceeds of the sale.

Don’t forget to cancel your home insurance policy as soon as you get the sales proceeds. If you are making automatic mortgage payments, cancel that also.

Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for nearly 30 years. Contact her at hchilvers@brcl.bm or 332-1793. All questions will be treated in confidence. Look for Ask Heather Real Estate on Facebook