What Are The Costs Of Selling Your Home?
It’s essential to know the costs associated with selling your house after you have lived in it for a while. In order to sell your house, you should expect to spend approximately 15% of your home’s sale price. There are ways to reduce that amount. We can help you determine which expenses are essential and which ones are more options for your budget.
What is the Cost of Selling a Home?
When it comes to preparing your house for sale, you’re likely to spend a lot of money. There are many expenses involved in preparing your house for sale. Let’s take a closer look at some of these costs.
Real Estate Agent Commission
The cost of hiring a Realtor or agent to sell your home will be the first expense. This commission is likely to range from 5 – 6% of the sale price. Even if you need to pay Realtor, fees, most real estate professionals recommend that you hire a listing agent to sell your house. It may be tempting to sell your home yourself. However, there are many reasons why you should hire a Realtor.
- Sometimes, a buyer’s representative won’t show houses if there isn’t a selling agent.
- Selling a for sale by owner (FSBO), home may end up costing you more in the long run.
- Agents can negotiate for you and ensure that you receive a fair price.
- When it comes to how to prepare your house for sale, real estate agents can provide valuable guidance.
Our verdict: While selling a home can be done without the assistance of a real estate agent you should still be prepared to manage all negotiations, valuations, and paperwork.
Pre-Inspections
Pre-inspections typically cost between $300 and $500. A pre-inspection can seem like an unnecessary expense but it could be a worthwhile investment. Potential home buyers often back out when they discover unexpected problems in their appraisals or home inspections. Delays in selling can prove costly and frustrating.
Seller concessions are very common. While there are limits to the amount of a home’s appraisal value and purchase price that can be offered in a seller concession, they won’t stop you from spending a lot. With a down payment of more than 25%, the seller can still contribute up to 9% when their mortgage is a conforming loan for a primary residence.
If you are aware of potential issues and have already incorporated them into your home repairs budget or terms, you will be able to negotiate better.
Our verdict: Although not required, it is highly recommended.
Professional Cleaning
A professional deep clean typically costs between $200 and $400. The square footage of your home will determine the cost. You could probably do this yourself. It’s up to you to decide if you are willing and able to put in the effort during a stressful sale.
Our verdict: This is a great investment for overwhelmed and busy home sellers.
Home Repairs and Improvements
There are many home improvements that can increase the value of your house before you sell it. Not all home renovations are equal before selling. Kitchen renovations can be very cost effective and increase your home’s value. Windows, however, is a big money sink. You’ll spend about $4,000 on average and this will likely be a worthwhile investment.
Our verdict: We recommend this expenditure.
Landscaping
The average seller spends $145 on landscaping. It’s up to you to decide if a little bit can make a big difference in your home’s curb appeal, or if it’s better to leave it as is.
Our verdict: Some people should consider this expenditure.
Home Staging
Staging can help you set your home apart from the rest and give buyers that “love at the first sight” feeling.
Because of the logistics involved in moving furniture around, many people find it difficult to stage their homes without professional help. You will need to put in a lot of effort to make your home attractive to a broad range of people. Remember that a quick sale can save you a lot of money.
It costs around $2,000 per month, assuming it is only for one month and including the furniture rental fees. The cost for a stager who will only declutter and arrange is typically around $800. With effort and preparation, it is possible to stage your home for free.
Our verdict: Even for the most accomplished DIYers, this is a worthwhile investment.
Professional Photography
Selling your house requires professional photos. The average cost of professional photography is around $200. This may not be the budget you have in mind, but it is essential that your home looks its best for any photos that are taken.
Our verdict: We highly recommend this expense.
Keep Utilities Running
Nothing is worse than visiting a home without air conditioning during the summer heat. If there is no air conditioning, lighting, or running water it can be difficult for home buyers to envision themselves living there.
You will need to ensure that your utilities are working even though your home is no longer your primary residence. Energy Star estimates that the average utility bill costs $171. However, this will vary depending on how much you use and how energy-efficient your house is.
Our verdict: Highly recommended.
Home Warranty
A home warranty gives peace of mind to a buyer who is looking to buy a refrigerator or fix their furnace. A one-year buyer’s warranty on their home costs between $350 to $600, depending on where you live and the service provider.
Our verdict: Sellers with older homes should consider this cost.
Capital Gains Tax
The capital gains tax is not applicable in most cases. To be sure, you should check your situation. This tax may be required if you have lived in your property for less than a year, are selling a vacation or rental property, or if the property has increased in value by more than $250,000 ($500,000 if married filing jointly),
Final Costs for the Seller
Closing costs
Buyers don’t have to deal with closing costs. There may be a prorated tax on your property and a transfer tax. The amount of this tax varies depending on where you live, so make sure to check the regulations in your particular area.
You may have to pay for the title search as a seller to ensure your claim to the property is clear. This is a common seller concession. It is usually $200-$400. In order to ensure that the title is clear, it’s common for the seller to cover the buyer’s title insurance.
There may be brokerage fees, escrow fees, or courier fees depending on which lender you are dealing with and the terms of your purchase agreement.
Moving costs
Moving can be a stressful experience for many people. They may decide to pack their belongings and rent a truck, then drive the entire distance. Others hire a moving company to help them focus on other tasks while they sell their home. You’ll pay approximately $2,300 to move within 100 miles of your home, and $4,300 to move further.
It all depends on the services you require. A full-service move will be more expensive than one that you do yourself. It may seem expensive to pay moving expenses but it can help you reduce stress.
Mortgage Balance
You will need to repay the mortgage loan balance if you have a mortgage on your house. In most cases, you can pay off the mortgage balance from the sale of your house. You can also use any extra money to make a downpayment on your new property. If you are unable to sell your house at the price you expected, you may have to borrow from your savings to pay the mortgage payment.
A prepayment penalty may apply to you if your mortgage is paid off early. Ask your mortgage lender if you need to add a fee to your loan balance. Rocket Mortgage(r) doesn’t charge prepayment penalties.
What is the Average Cost to Sell a House?
Let’s look at an example to show how much it would cost for your house to be sold if the house was valued at $250,000 based on the numbers mentioned earlier. This is just an example, and it may not reflect all costs and fees associated with selling a house.
Approximate Calculating Total Costs To Sell A House
| Cost of selling a house: | Seller’s costs: |
| Agent commission fees | $12,500 |
| Inspection | $400 |
| Cleaning | $200 |
| Repairs and improvements | $4,000 |
| Landscaping | $145 |
| Staging | $2,500 |
| Utilities | $171 |
| Photography | $200 |
| Closing costs | $7,500 |
| Moving costs | $3,000 |
| Home warranty | $450 |
| Total cost: | $31,066 |
This estimate shows that a $250,000 house could cost $31,066 to sell. To reduce selling costs, sellers could choose to forgo certain expenses. It’s a good idea to establish a budget before you start the selling process.
The bottom line: Before you put your home on the market, be aware of the costs
You can easily feel overwhelmed by the costs involved in selling your house. These costs can actually increase the resale price of your property and will help you sell your house faster. Not only will it save you stress, but it also means that your home is more likely to sell quickly. You can save money by selling your properties faster.
It is often wise to sell your home because, unlike homeownership, most of the costs involved in selling it are well-received. You may be unsure of the costs involved in putting your home up for sale. Take a look at our tips to prepare your house to sell.
