From the Law Offices of Richard Alan Gaudet: This article describes the basics of the costs associated with the closing process….the final step in selling a home in Massachusetts. Our offices assist home sellers in the following Massachusetts counties: Essex, Norfolk, Suffolk, Middlesex…including Greater Boston, the Merrimack Valley, and the North and South Shores.
Closing Costs for the Home Seller in Massachusetts
The exact amount of closing costs will vary depending upon the circumstances of each home sale. Typically, the buyer has higher closing costs than the seller of a home. However, because these costs can be negotiated and allocated to either party in the purchase and sale agreement, it is a good idea to have an attorney vet the purchase and sale agreement to engineer terms favorable to the seller when possible. Generally speaking, the seller of a home in Massachusetts will have the following expenses which will typically be deducted from the proceeds of the sale of the home:
Real Estate Agent/Broker Commission of 5-6%
Most real estate agents selling a home will take about 5% of the home sale proceeds in Massachusetts. The sale of a home for $500,000 would yield $25,000 in commission for a real estate agent with a 5% commission. It is easy to balk at commissions, to feel that the work of the broker is overvalued. However, consider the amount of time and effort that a good realtor takes ensuring that your home is ready to be listed, gets the best price, markets your home, etc. It is worth the price paid to a competent broker to get the most value from the sale of your home.
Recording Fees and Other Fees
Recording a deed in Massachusetts currently costs $155, a mortgage $205, a discharge of a mortgage $105. These prices may fluctuate over time, but as of 2021 are accurate. The closing attorney will handle recording of the deed.
Real Estate Transfer Tax
While the exact rate varies depending upon the location of the home in Massachusetts, M.G.L. chapter 64D, § 1 is the source of this law. Transfer taxes run approximately $2.28 for every $500 in the value of the property. So, for a $500,000 home transfer taxes would be $2,280, for example. The stamp used to pay the deeds excise are purchased at the Registry of Deeds located within the same jurisdiction of the property that is for sale. The proceeds of this tax go directly to the respective Registry of Deeds which then forwards these monies to the Massachusetts Department of Revenue.
Mortgage Payoff
It probably goes without saying, but your existing mortgage (if one exists) will need to be paid off prior to the sale of the home. The same principle applies to a second mortgage or home equity line. These mortgages are structured so that upon the sale of the home the mortgage becomes due immediately, by what is known as an acceleration clause. The proceeds from the home sale are used to satisfy these obligations first, then, the remainder moves to the seller.
Septic (Title V) Expenses
Title V, related to a septic system, only apply to sellers who maintain a home that is not on the public sewer system and uses a septic system instead. Massachusetts law requires inspection of a septic system, and a valid Certificate of Compliance prior to the sale of the home unless a provision exists between the buyer and seller which allows for money to be escrowed to repair a septic system that has or is likely to fail inspection. The cost of a Title V Certificate of Compliance runs between $400 and $800.
Smoke Detector and CO Detector Certificate
A smoke detector and carbon monoxide detector certificate is received by contacting the fire department in which the property being sold is located. Contact your local fire department and you will be visited by a fireman who will conduct the test. If the fire department does find some issues that need to be corrected, they will inform you of this fact. A smoke detector and CO detector certificate lasts 60 days in Massachusetts, so be sure to schedule this close enough to the closing date to allow the test to be completed in time and not so close that the 60 days run out prior to the closing date. The cost of a smoke and carbon dioxide detector certificate is about $50-$100 in Massachusetts.
Attorney’s Fee
Hiring a real estate attorney to represent you at the sale of your home is not required in Massachusetts (although a lender is required to have an attorney oversee the process). It is, however, advisable and at relatively low cost for the value received (typically between $800 and $1100). Think of the seller’s attorney as a guard dog overlooking the sale process and the real estate agents for the buyer and seller, and the attorney for the buyer (for that matter) as the remaining players in the process. The seller’s attorney reviews the purchase and sale agreement to negotiate the best possible terms of the contract for the seller. While many purchase and sale agreements are straightforward, each will have within them small details that could greatly affect what happens if the buyer’s wish list is not met during the sale process. The seller’s attorney negotiates out, or at least modifies, contingencies in the purchase and sale that benefit the buyer.
Your attorney will also write the deed that transfers the property to the new buyer, will go over all of the final closing costs associated with the sale with you so that you can understand them and challenge anything that is unexpected. An attorney can also act as you, for signing purposes, if you are unable to attend the closing.
One final benefit to hiring a real estate attorney as the seller of real estate is that you will have someone to go over the title certification produced by the buyer. While it is possible that there will be no issues affecting the marketability of title to the home prior to closing, it is also possible that there may be some issues which need to be fixed prior to closing by the seller. It is important, as the seller, to understand the title certification report to avoid unnecessary frustration during the sale of the property.
DISCLAIMER:
The information provided in the pages and posts of this website are for general informational purposes only. The information presented on this site is not legal advice, and no attorney-client relationship is formed by the use of this site.
