How Much are Seller Closings Costs in Kansas City Metro

If you are pondering a home sale and are doing some homework on seller closing costs, this post will walk you through it.

Two quick things before we get rolling. First, none of these items are paid out of pocket from the seller. They are simply taken out of the proceeds at closing and will be clearly line-itemed on the settlement statement. Second, prorations on settlement sheets tend to be confusing but if you just look at it this way, you will get it. Should the seller have to pay for something they did not use? No. Should the buyer? No. That is all there is to prorations. They are simply adjustments using that logic.

1. Tax Prorations — Say you close on your home on May 1st. You owned the property from Jan 1st of that year all the way up to May 1st. This means that the property tax bill that comes end of year shouldn’t be the sole responsibility of the buyer since they didn’t own the home for that first five months. Costs for that part of that tax interval will be credited to the buyer. After the title company verifies all bills paid to the county from the seller, they will determine the prorated figure based on the on the date of closing.

2. HOA Prorations — Similar to the tax section above, if a seller has prepaid on their HOA fees, whether they are annual, quarterly, monthly. They won’t pay for time they don’t own the property and that will be added to their proceeds. On the flip side, if the seller hasn’t yet paid for the HOA fees for the time they have owned during that billing interval, the past due amount will be taken out of their proceeds. If you home doesn’t have an HOA, then nothing to see here folks.

3. Buyer’s Title Policy — Most real estate contracts stipulate that the sale is contingent on the seller providing what is called clear title and it is customary that the seller pays for the buyer’s title policy. This is the title work done to make certain that no one has any claim to the property (IRS Lien, court judgement, mechanics lien, marital interest, etc) except the seller and the seller’s lender. Depending upon the sale amount, figure around $600-$800 for this title policy in the KC Metro.

4. Seller’s Closing Fee/Wire Transfer Fee — I usually put these together when I give estimates to my sellers. The closing fee is a charge from the title company (approximate $225) and the wire fee (approximate $20) is the charge to move the proceeds to whatever account the seller specifies. Combined around $245.

5. Realtor Commissions — Whatever agreed upon (written listing agreement signed between seller and brokerage) commission will be subtracted from the seller proceeds. If a seller gets $200,000 on their sales contract, and they had signed a listing agreement with a 6% commission split evenly between the listing and buyer’s agent, they will see the agent commissions as folllows: $6,000 to Listing agent brokerage and $6,000 to Buyer’s Agent brokerage.

6. Outstanding Loan Balances – Mortgage balance, home equity line of credit, 2nd mortgage will be taken out of seller proceeds. The title company will reach out to the lender to get the payoff balance.

Transparency….Transparency….Transparency

The seller will have several opportunities to review closing costs before and during the transaction. We review an estimated proceeds sheet prior to signing a listing agreement and then prepare and review another when offers are reviewed. Finally, the seller will have an opportunity to see the title’ company settlement statement before they go to the seller closing to sign paperwork. Your realtor will review the statement ahead of time to make sure all the figures are accurate. The point I’m making here is that there is never a single time that the seller should be in the dark as to what an offer will net them at closing.

As always, don’t hesitate to reach out with your questions. I’d love to help.

Terry Jackson | Terry@DomicileOne.com | www.DomicileOne.com | 913-488-5623

Advertisement

KC Metro Home Buyers, I know you’re frustrated.

Whether it is KC, Omaha, Sacramento, Orlando….fill in the blank! The tight inventory is discouraging buyers in a big way.

It’s not that buyers aren’t realistic about paying fair value on a property. They just have a bit of heartburn about giving up their first born to be the selected offer!

Not too long ago, buyers had to use speed as their most effective weapon. Hurry to see the home and get your offer in first. No more. Today, you can be the first offer submitted, however, you will have company very quickly. Particularly in homes under 300K, the competition is mighty.

OK, so how do you compete if speed to offer doesn’t really seal the deal any longer? This is the method I use with my buyer clients.

1. I provide them with two charts that I whipped up to emphasize this tight market.

The first shows the declining inventory of homes for sale in the KC Metro as compared to closed sales over the past 7 years.

The second shows median days on market at various price points here in KC.

By demonstrating the tight inventory and low days on market, I’m not intending to scare them, but simply be crystal clear about home availability when we develop our offer strategy.

2. Step two is to develop a buyer’s offer template that we can use over and over. I say over and over because it is not at all uncommon for buyers to need to repeat the showing/offer process before they get a signed contract.

Example of Domicile One Realty Offer Template

The ideal offer would be cash, well over list price, waiving appraisal, possibly accepting home in it’s present condition (after inspections), closing in 10 days, etc. That scenario, however, does not even look anything close to what most homebuyers can do.

My approach is to determine and highlight what each individual buyer can bring to the table. This takes into account their comfort level on pricing, timeline and terms. I want each buyer to have a customized plan that highlights the very best offer that we can write. Doing this before hand is time well spent because, once you start touring homes, there isn’t much time to get your offer together plus it helps you stick to the plan when feeling overwhelmed.

Yes, it is competitive out there right now, but homes are being sold every day here in Kansas City. With market knowledge and a preplanned offer strategy customized just for them, buyers can venture out with the confidence that they have a well thought out plan.

As always, we are out here if you need us for anything. Give me a ring with any questions you have.

Note: If you are currently working with a buyer’s agent, this is not intended to be a solicitation for business.

Best,

Terry Jackson | Terry@DomicileOne.com | www.DomicileOne.com | 913-488-5623

Is Kansas City’s Low Housing Inventory beginning to shift?

Each month, the Kansas City Regional Association of Realtors releases the monthly metrics for all housing activity in those counties covered in our local MLS database…and each month they reflect the change in housing inventory from the current month to same month last year.  That number is always relevant because we want to see if we have more homes on the market, less, or no change.  Why?  Inventory is, as you may well guess, a major factor in home values and is THE contributor to the massive appreciation of homes in the past years.

Since October of 2014, we have had double-digit decreases in inventory (month-after-month) when compared to the previous years.  For many months, we were seeing over 30% decreases.  So where we might have had 5000 homes sold in a given month, we dropped to 3500.  We have had 41 consecutive months of double-digit decreases…until this past May where we dropped under 10%….then June where we dropped to 6.7%.

For people who watch this carefully, this is a “hmmm” moment.  Some might think, “well this is summer and more homes are on the market in the summer”.  Remember, we have been losing ground on inventory for years now and all those years had summers too.  Another argument could be new build inventory starting to finally catch up statistically.  (See the permit report from the Home Builders Association of Greater KC) No doubt, new construction has had a month-over-month increases for some time now, but residential resale (on its own) went under 10% inventory reduction in June.

OK, so what does this mean and why does this matter anyway?  Two months hardly makes a trend, but when buyers are being squeezed out of the market due to rapidly increasing home price valuations, this is a bright spot for them.    I’ve said many times before, market extremes are not good for anyone and that certainly includes the housing market.   We would like for qualified buyers to find enough homes to get into and for sellers to have a healthy buyer pool simultaneously.  What I’m describing is a neutral market that favors neither the buyer or the seller.

We are a long way from a neutral market, but benchmarks that I’ve just described get my attention.  I’ll be watching carefully to see if this trend continues and you better believe I will have a post when we have our first positive change in monthly inventory.

Thanks so much,

Terry Jackson | Realtor at Domicile One Realty | 913-488-5623 | www.DomicileOne.com

 

 

Kansas City’s Neighborhood Appeal Tops Survey with Recent Homebuyers.

For years now, our real estate company ( Domicile One Realty)  has conducted surveys with buyer’s agents that have closed transactions in a variety of cities in the metro.  What we are trying to do is flesh out what is motivating buyers to purchase homes in those municipalities and garner some high-level information on the buyers themselves.  Information such as (1) Are they first time home buyers? (2)  Did they use any area down payment assistance programs? (3) Approximately what age were the buyers?

Why do we do this?  I believe it puts us ahead of the pack when it comes to understanding buyer motivation and that provides an extra level of service and insight to our seller clients.  It also gives us a local industry knowledge that we are happy to share with other Realtors and community stakeholders.

Over the years we have looked at area municipalities and have been pleased to see how school districts, chamber of commerce presidents, local businesses, etc have opened their doors to review this data and the insight it brings to their own mission.

We typically see a trend of pricing being a number one motivator of city selection with first -time home buyers typically the highest category of buyer between ages 25-35.

• Typically only 1 out of 10 buyers participated in the MHDC Down Payment Assistance Programs.

Not too long ago, I ventured out to gather the same data in KCMO wondering if the trend would hold up.

Although pricing was still a very high consideration on reasons to purchase in KCMO, take a look at the City/Neighborhood Amenities category.  This was the #1 motivation of the buyers.   Although it doesn’t look like it topped the category with much, this was our first survey where this category had any real significance at all let alone overtaking pricing and proximity to work.

Based on our survey responses, KCMO continued the trend of First-Time Home buyers making up the highest segment of the purchases with the 25-35 age bracket the largest category in age group.   Of those that responded, 70% of the buyers did not have school age children.

One survey item is always a bit discouraging to me is the participation in the MHDC (Missouri Housing Development Commission) down payment assistance programs.   On average I see about 10%-15% participation based on the overall survey data.  Of course, I have no way of knowing if these first time buyers would have been eligible for the program, but it seems that with (1) the majority of buyers being price motivated, (2) first time home buyers, and (3)at a relatively young age in their careers, we might have seen higher participation.   This might speak more to the lack of awareness in the program than eligibility of the buyer.  If that is the case, we as Realtors need to do better in spreading the message of all options available to potential home buyers.

If you or your organization would like more information on this survey, please don’t hesitate to contact us.  As mentioned previously, we are always happy to share what we find and we’d welcome an opportunity to sit down and review the full survey data.

Best regards,

Terry Jackson | Managing Broker | www.DomicileOne.com | 913-488-5623 |

 

 

KC Metro Q1 Market Video Summary

Hi everyone.  Check out the first quarter video summarizing the KC Metro Market Statistics.  Interesting that they predict two additional interest rate increases this year, but feel that our area wages plus low unemployment will have a minimal impact.

 

As always, we want to help if there is any questions you have or need us to stop by and discuss an upcoming sale or purchase.

Best regards,

Terry Jackson | Domicile One Realty | www.DomicileOne.com | 913-488-5623

You’ve never needed a Buyer’s Agent more.

Hi there, everyone.  I wanted to spend some time today sharing how vital it is to have a buyer’s agent working for you in our current KC Metro market.

Maybe you’ve heard, but we are in a seller’s market with not nearly as many homes on the market as we have buyers.  It shows no sign of changing anytime soon.  Buyer’s venturing out into this market will need professional, experienced buyer’s agents to assist them in their journey and ultimate purchase.  With the market tilted as it is, buyers are frustrated and exhausted when trying to get under contract.  In an article in the Kansas Star last year, they referred to our area as “inventory starved” the likes that we have not seen in years.

I’ve put together some of the many reasons you will want to have a Realtor by your side.

#1 — They have the experience to know if the home(s) you are looking for are a good fit for the loan you have your preapproval on.  This will save you needless expenses.

FHA loans (non-rennovation) will have appraisal issues regarding condition if the home is in poor condition.  (ex.  peeling paint, electrical wiring missing, etc.).  Homes in this condition are oftentimes sold in their present condition and, if the buyer won’t repair prior to closing, the loan won’t go through.

#2 — Your agent can preview a home for you freeing up your time.

This is so helpful as they know what your search criteria is and can check it out as the home comes on the market.  This frees up your time plus allows you to only see homes that you know will be meeting your list of wants.

#3 — Your agent can get some info on the seller’s motivation helping you craft an offer.

Do the sellers require a long escrow?  Need additional time to move?  Your agent can get the backstory on that for you allowing for you to (1) present yourself as willing to work to the needs of the seller and (2) craft that into your offer making you a more competitive candidate.

#4 — Coach a first-time buyer as to pace and offer requirements.

Just because a relative told you that they offered 10% less on a home back in the day to leave room for negotiations does not make it a good idea in today’s market.  Your agent will share sales comparisons in the area and the speed of sales in same area.  He or she will guide you on making an offer in this buyer’s competitive arena.

#5 — They will walk you through the timeline and costs associated with the purchase.

Your buyer’s agent will provide you with an estimated costs sheet so that you will have a good idea of what you will need to be bringing to the transaction.

Some first-time buyers are unaware that they will have costs beyond a down payment and the agent will provide that estimate for them.  This is critical for the buyer as they need to know what their obligations will be at the closing table and if they can meet them.  In a more balanced market, sellers might entertain helping the buyer out with their closing costs as part of the negotiation, but they are getting offers where that is not necessary.    With that, a buyer might not be ready to enter this market until they have those funds themselves.

 

Your buyer’s agent is a critical member of your team as you venture into this market.  They are your experienced professional, your coach, your support system.  They represent you and have a fiduciary duty to look out for your best interest.

If you are interested in buying or selling this summer, we would love to be one of the agents on your interview list.  We look forward to sharing our background, experience and client testimonials.

Our seller clients enjoy our sensible pricing of $3950 for the listing side plus 3% for the buyer’s agent.  Check out our website to learn more.

Take care,

Terry Jackson | Managing Broker | www.DomicileOne.com | 913-488-5623

 

 

 

 

 

50th Anniversary of Fair Housing Act

 

 

Hi everyone.  Hope you are having a wonderful week.

Today is a significant day.  50 years ago the Fair Housing Act was enacted.

Most of my first time home buyers are so young, it would never occur to many of them that, when we happily go house hunting, there would have been a time that they could have been discriminated against in housing.  Could have been their race, their gender, their religious affiliation, the number of children they had, etc. ….and they would have had no legal recourse.

The National Association of Realtors has created a wonderful video about the history of this landmark legislation as well as how we must continually strive for inclusiveness.

Best regards,

Terry Jackson | Realtor at Domicile One Realty | www.DomicileOne.com | 913-488-5623

2018 KC Metro Housing Forecast

Hi there, everyone.  Thanks so much for taking the time to check out our post today.

I’m going to focus on the residential outlook for 2018 and the specific items that continue to drive our seller’s market.

Wichita State University’s Barton School of Business researched and published a concise overview of our KC Metro market.  This was through their Division of Real Estate.

Here are some takeaways from the report (Click to view the full 8 page report)

What drives buyers?  Good area employment opportunities and mortgage interest rates and both of these support the buyers right now.  Per their report, the employment growth in KC has outpaced the national rate over the last three years.  Couple that with 30 year fixed mortgage rates remaining attractive and we have lots of buyers interested in the housing market.

The buyer’s, however, run into a tight squeeze as home sales growth continues to decrease year over year.  This tight home inventory is the driving force behind that.    New home construction continues to increase and the report predicts an increase of 2% or 6005 units in 2018.  This is welcome news to be sure, but not nearly enough to neutralize this tight market.

To give you some perspective on how swift the market is right now, we are under 2 months of inventory in the KC Metro right now.  This means that it would take less than 2 months to sell all homes currently active based on rate of sales.  A neutral/balanced market would be at 6 months.

The WSU report has a wonderful graphic showing percentage of homes sold in the first 10 days.   From 2011-2015,  26.8% of homes were sold within the first 10 days of being listed.  In 2017, it was 46.9%.  This illustrates the competition that our buyers are facing when trying to get under contract.   This is particularly true of homes between 100K-250K per the report.

You can imagine what this does to home prices.  According to the report, home prices are up 23.8% since 2013 and are at their fastest pace since 2001.  The report predicts another 6.6% rise in prices in 2018.

If there is any additional info you need or questions we can help with, please don’t hesitate to contact us.

Terry Jackson | Domicile One Realty | www.DomicileOne.com | 913-488-5623

 

 

 

Tips on Negotiating your Home Sale or Purchase

Today’s topic covers home sale negotiations, some common scenarios and tips for your transaction.

As Realtors, we would like you to be as enthusiastic and excited at the closing table as you were on the original consultation, however, there are many steps between the two.  The types of negotiating styles of the various parties can be effective or an obstacle to overcome.

Unless a home is being sold as is, there are two negotiations on a real estate purchase.

1. The first is the initial offer and terms such as closing date, earnest money, seller paid closing costs, etc.
2. The second is the repair request negotiations based on a qualified inspector’s report.

The first negotiation oftentimes has influence on the latter.  Too much back and forth on the initial negotiation of price and terms results in (what I like to call) “negotiation fatigue”.  This emotional drain sometimes carries over into the inspection related repair negotiations that will occur less than two weeks later.

Know what market you are in.  In a strong seller’s market, the seller might have a backup offer or 5 others they passed over to sign yours.  I’m not saying take something that is unacceptable to you, but buyers need to cognizant that they have competition.

Most times, we see people who want to feel respected and treated fairly and they do likewise.  Other times, and it is rare, we encounter people that not only want to win, they just as passionately want others to lose.  An unfortunate mindset to be sure.  If you enter into a real estate transaction thinking that you will be getting everything you want, you will be in for a difficult road ahead and you may not make it to the finish line.  This mindset views the other party as an adversary.  To what degree depends upon the individual.  We aren’t saying that all transactions are hearts and flowers, but if you believe you must prevail at every turn, you will be disappointed in the outcome.

Tips for negotiating in a real estate purchases and sales:

• No home is perfect….not even a new one.  Show some flexibility and be realistic.
• Be cognizant of what type of market you are in.  We are in a strong sellers market and buyers cannot expect to submit pages of minimal repair requests.  The buyer’s agent is instrumental on counseling their clients in this regard.
• Be clear on what items are deal breakers for you.  Prioritize your wants and needs.
• Just because we are in a seller’s market does not mean the seller has to do nothing regarding repairs.  Unless the property is sold as is, the buyer is expecting some reasonable consideration on their repair requests.

In the end, you make the decisions on what will and will not work regarding negotiations.  Your real estate agent, however, has a fiduciary responsibility to you….the client.  They are working for you and their experience in the market, knowledge of property condition and area pricing will provide you with a fact-based negotiating strategy.   Utilize their expertise and counsel.

Thanks for taking the time to read the post.  Reach out to us with anything you need.

Best regards,

Terry Jackson | Realtor at Domicile One Realty | www.DomicileOne.com | 913-488-5623

5 Quick Tips for Beginner Homebuyers

Hello everyone.  Our Real Estate Brokerage, Domicile One Realty, was founded to support first time buyers.  We want to make certain our clients receive professional representation that exceeds all others with a strong focus on cost savings.

We don’t expect our clients to know the process A to Z.  That’s our job.  We do, however, want our clients informed of the process and costs so that they don’t have any surprises along the way.

Here are some quick tips for those considering a purchase.

— Find out if you are eligible for down payment assistance programs in your area.

Missouri has  great programs for first time buyers offering lowered interest rates, cash for down payment or participation in Federal Tax Credit on 25% of your annual mortgage interest.   Give us a call to see if you are eligible.

— Get pre approved.

Speak with a few lenders and see which is a good fit for you.  Ask them about their current rates and what their APR is as well.  The APR will give you a good feel as to their charges and fees as compared with other lenders.  Head’s up if you are eligible for Missouri assistance programs.  Not all lenders participate in these programs so make certain you ask them.  You can also give us a ring and we will direct you to the resources to find out.

— Start making a list of things that are important to you in your home.  Examples would be school district, square footage, whether you want a basement, how many bedrooms and baths, garage, etc.  Just keep brainstorming so you will have that ready when you meet with your buyer’s agent.  Have your “Top 5” list ready.

— Interview more than one buyer’s agent.

Talk with a few Realtors about their service offering.  We think of this quite a bit on the listing side of things, but buyers need to find that good fit as well.  This Realtor will be undertaking an important role in your journey.  Ask for resume, references, experience in the industry.  Pay attention to the speed of their call backs and email responses.  In this market, you need answers quickly and you will need a full-time agent that is responsive.

— You don’t have to do this alone.

Even when buyers might be purchasing a home for themselves, always feel free to bring along parents, significant others, friends, etc.  If there is an individual(s) whose opinion you value, by all means, invite them along on the home showings.  I’ve been a full-time agent for almost eight years now and friends and family are always welcome.  This should never be discouraged.

This is a short list of items to consider as you start your homebuyer’s journey.  This time of year, we usually start to see the home sales pick up and we’d love to sit down with you and be one of the agents you interview.    We are the only brokerage in Kansas City that specializes in first time home buyers and we bring a lot of experience and cost savings to the table.

Best regards,

Terry Jackson | Realtor at Domicile One Realty | www.DomicileOne.com | 913-488-5623