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Let’s Talk Money: The Biggest Financial Questions Sellers Have

Bret Chance



Aug 12 10 minutes read





How do real estate commissions work?


The exact commission is set when you hire your real estate agent. This will usually be a percentage of your home’s sales price. (The average is 5-8% of your home’s sales price.) Once your home sells, the commission is paid to your real estate agent. 







“In Real Life” Marketing: From print marketing to open houses to outreach efforts and networking with other agents, this is everything involved in attracting potential buyers to your home. 

Business Expenses: Think office rent and supplies, signs, lockboxes, travel expenses, specialized software, licensing and certification fees, self-employment taxes and other costs related to their work. Top agents also spend a large portion on coaching and training for things like negotiating, market trends, and other skills to know how to best protect and guide their clients.

Referral Fees: Some agents offer payment to another agent or real estate company who brings a new client their way. These fees can range from 25-45%.

How does selling my home impact my taxes?





What expenses are tax-deductible when selling my home?




*For more specific tax advice, please reach out to a certified public accountant.

What is option fee vs. earnest money?

Once buyers come into the picture, you may hear the phrases “option fee” and “earnest money” come up. Both are separate from their offer amount and are negotiable, but they’re very different things.

An option fee is a non-refundable fee paid to the seller during the option period, a set time specified in an Offer to Purchase contract. This period allows potential buyers to take a closer look at your property (inspections). The fee essentially compensates you for not leaving the listing open to other offers.

At any point prior to the end of the option period, the buyer can terminate the contract for any reason, even if there is no reason at all. If the buyer proceeds with the contract, the option fee is usually credited at closing. 


If everything goes smoothly, the earnest money is credited to the down payment or the closing costs of the buyer. However, if something goes wrong — your home fails to meet loan requirements upon inspection or there’s a contingency met outlined in the purchase contract — the money is refunded to the buyer. 

Why is the assessed value different from the market value?



The market value of a home, on the other hand, is essentially how much it would sell for today based on current market trends. This price is set based on several factors, including location, outside and inside conditions. Your real estate agent will also consider homes that have recently sold in the area to understand the market in your specific neighborhood. They'll also consider improvements that you've made to the property, but the market value focuses greatly on what potential buyers are looking for. Ultimately, market value is what a buyer is willing to pay for a property.

Net Sheet

When planning to sell your home, ask your real estate agent to create a net sheet. This will give you a breakdown of the fees associated with the sell of your home, and an estimate of what you will make after all fees are paid. The net sheet will keep you from any "surprises" in your sale.

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