In life surprises are great except when it costs you money! While selling thousands of Massachusetts homes over the last thirty plus years, I 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 tax to sell their home.
One of the biggest expenses that is overlooked is the Massachusetts tax stamps. 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 armed to have your financial house in order whether you are buying another home or possibly renting.
Massachusetts Tax Stamps
Once you have lived in Massachusetts for a while you realize just about everything gets taxed. I have found however, that most Massachusetts home seller’s do not realize there is a tax on selling a home if they have not done a transaction before.
It’s not hard to understand that if you have never sold a Massachusetts home before you may not realize there is sales tax. This tax on selling a home is known as the Massachusetts tax stamps. In the majority of Massachusetts the tax stamp equals $4.56 per thousand dollars of the sales price of the home.
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 income given to the registry in which your home resides and is given to the Commonwealth of Massachusetts Department of Revenue.
While most of Massachusetts is taxed at 4.56 per thousand dollars including Middlesex, Worcester and Norfolk Counties, 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. The Dukes and Nantucket Counties also charge an additional 2% of the sales price that gets forwarded to the local land bank commission.
Massachusetts Real Estate Commission
Real Estate commissions are of course the biggest expense when selling a home. It should be emphasized that commissions are not set in stone and can be negotiable from one brokerage firm to the next. An individual Realtor in one company may have a different rate from another.
In many firms such as RE/MAX the commission a Realtor charges is completely at their discretion. 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%. A discount brokerage often times will charge less but not offer the same services.
Massachusetts Attorneys Fees
I am a firm believer that every seller should have an attorney review the documents in a Real Estate transaction. 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.
A Real Estate attorney in a home sale can do everything from the review of legal documents such as the offer contract, the Massachusetts purchase and sale agreement (P&S), to attending the closing either with you or with power of attorney in hand. Keep in mind it is illegal for a Realtor to be giving legal advice.
Most buyers will have an attorney who will make changes to the standard P&S. You will be putting yourself at risk without a complete understanding of the purchase and sale.
Legal representation can vary quite a bit depending on what the attorney is asked to do. As a ball park you can expect to pay anywhere from $300-$1500. Obviously you will be closer to $300-$800 on a standard purchase and sale review and closer to $1500 if you have a more complex transaction and the attorney will be in attendance at the closing for you.
Massachusetts Title V
The Massachusetts Title V is a home sale expense every seller in Massachusetts has to pay unless they are serviced by public sewer. It is a state law that a Title V must be completed upon the transfer of Real Estate unless there is no mortgage. Lenders require a passing Title V or in the case of failure some lenders will let you escrow an amount that is set aside to provide a new system.The escrow amount is usually 1.5 times the cost of the new septic system.
You can expect to pay around $800 dollars for a Title V inspection. The cost could become higher if the septic tank or distribution box are in an area that is hard to get at.
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 also be extended a third year if you pump the system in all three years.
Smoke Detector and carbon monoxide detector certification
In Massachusetts you must have your smoke and carbon monoxide detectors inspected prior to closing as it is a state law. These inspections are done by the local fire department in which you reside. The charge for inspecting the smoke and carbon monoxide detectors is typically around $25-$100.
You should be aware that there have been new regulations put in place surrounding Massachusetts smoke detector laws. The new law could have an impact on the cost of selling your home if you need to install more or new detectors.
Preparing A New Massachusetts Deed
In Massachusetts it is the sellers responsibility to have a new deed prepared for the buyer that gets recorded at the registry. The preparation of a new deed is usually $100-$150 and is done by the attorney representing you or possibly the lenders lawyer if you do not have legal representation.
Miscellaneous Closing Costs
There will also be some minor miscellaneous expenses for mailing, filing fees, etc that will be added to your HUD settlement statement at the closing. These fees can include overnight mailing, courier services, wiring expenses, processing mortgage discharges and recording fees for the various documents at the Registry of Deeds. The total of these miscellaneous expenses will usually amount to a couple hundred dollars.
Massachusetts home selling costs are pretty straight forward when you know what they entail. Real Estate surprises however, are never fun especially when they involve taking unexpected money out of your pocket! Use this list of home selling costs in Massachusetts to plan ahead!
Nobody likes unexpected expenses. These are the Massachusetts closings costs you will be dealing with as a home owner.
The above Real Estate information on Massachusetts home selling costs was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at [email protected] or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 30+ Years.
Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service Real Estate sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA.
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