selling a house in houston tx, 7% tax? fishy

Perhaps she needs the broker's commission? That's usually on the order of 6%, though it may be negotiable, or even avoided if one doesn't use a broker.

If that's the case I have no idea where that $15k is coming from - most of the rest of "closing" costs are borne by the buyer. Is she upside-down on the loan (ie. does she owe more than the house is worth? If that's the case, she needs to come up with the difference to pay off that mortgage, too. That's the only thing I can think of which could come out to more than a percent or two on top of the broker's commission).

There have been, at different times and in different parts of the country, real estate transfer taxes. Not every locality has them, and such taxes are typically more like one half of one percent.

The transaction costs for real estate are outrageously high, but generally not as high as what you're suggesting. Something's fishy in your numbers. Even with a full service broker, if he or she were paid 7%, the rest of the costs shouldn't add up to more than another percent or two.

"cporro" wrote

It is customary (and possibly required by law where you are) for the realtor to break down all the costs to the seller and present them in writing to the seller.

I can say that the transaction costs for a home sale I am considering are about 7.5%. Five points of this is the realtor's commission.

Taking your words literally, I have doubts there is a 7% tax on a home sale in Texas or anywhere.

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"cporro" wrote

How long can you leave the money invested?

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"cporro" wrote

It is customary (and possibly required by law where you are) for the realtor to break down all the costs and present them in writing to the seller.

I can say that the transaction costs for a home sale I am considering are about 7.5%. Five points of this is the realtor's commission.

Taking your words literally, I have doubts there is a 7% tax on a home sale in Texas or anywhere.

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Don't know anything about Houston, or the specific area of Houston. I know that a city near us has a transfer tax for selling real estates, based on the sale price. So 7% tax may or may not be fishy.

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I've sold many a house in Texas. There is no 7% tax. Get the agent to give a detailed, written breakdown of the selling expenses. If the agent won't, get a new agent.

-- Doug

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The 7% figure is typical of a real estate agent's commission in many areas, not taxes. It means 7% of the sale price of the house. A couple of decades ago it used to be 6% in a lot of places, but it seems to have sneaked up a bit in recent years. All real estate commissions are negotiable. Try a few more agents if necessary and you could probably get it down to 6% or 5%. If you are able to go the FSBO (for sale by owner) route that is becoming increasingly popular, you could pay 0% and save many thousands! It takes time to do it yourself, true, but think of it this way: Suppose you have to put in 20 hours of work doing what is needed to sell the house yourself. Now, 7% of 309k is 2163, and

2163/20 is $108.15. So by selling the house on your own you would be saving/earning $108.15 per hour. If you could do it all in 10 hours that amount would be doubled. That hourly wage is not bad, considering that most of the work is paper work and answering the telephone, not back breaking labor.

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Sorry for the error in that last post. I should have said the amount of the commission is $21,630, not $2163. So it comes to $1081 per hour, not $108 per hour. (I thought that first figure was too low!) Even if you had to spend 100 hours of work selling the place, you still would be making $216 per hour. I wonder how many agents spend 100 hours selling a property.

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yeah, i wanted to look into sale by owner for our house. we just sold about 6 weeks ago. but everyone else was pitching the realtor to me as if a person needed some advanced degree or specialized skills. you'd think my wife worked for the realty company. on a house in san francisco the realtor's cut is a lot of money. then there is "help you sell" they have a flat rate...i think 10k. but i don't know much about them.

my sister is in a fine mess. not only will it cost 13% to sell according to her realtor. but she is in california. all kinds of lousy stuff has happened since she has been out of state. realtors cranking the ac ($400 bill), water leaks in the sprinkler system running for weeks, renters destroying property, bad realtors....

i'm just trying to figure out how she can unload this liability. i think she's crazy to hold it.

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i just talked to her. her new number is actually worse. 13%!

6% in closing and 7% in some type of tax. i'm going to try and check out her agent and the company. any ideas on where to look?

she is upside down on the house. bought for 312 selling for 310. but i'd guess the house is valued lower now. she bought it about 2 years ago.

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One of the first things you should do is find out exactly what those "6% closing" and "7% tax" figures mean. Either could refer to a real estate agent's commission, but not to the incidental closing costs associated with a sale nor to real estate transfer taxes. If you could be specific about what those costs actually include, people here could tell you whether or not you are being overcharged. At any rate it would be a good idea to contact a second realtor and a lawyer.

The "help-you-sell" and the "1%" realtors are not a bad idea if you want to do some, but not all, of the work yourself. The 1% figure on the signs is a sales gimmick, and you would probably end up paying more than that, but certainly nothing like 6% or 7%. And take your time, if at all possible! One of your greatest enemies in real estate sales (and purchases for that matter) is being in a hurry!

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