Planning to Sell Your Home? Be Aware of the Cost to Sell a House
Selling your home is both time-consuming and expensive, often more than a homeowner might expect. It's easy to get excited when you look at the latest Zestimate and seeing how much more your home is worth than when you bought it. However, if you're considering selling your home, you need to factor the cost to sell a house into your calculations.
It's important to factor in and be prepared for the hidden and sometimes overlooked cost to sell a house. Some expenses are negotiable, but sellers need to expect to pay the costs of selling their homes. Today we're living through one of the biggest seller's markets in our lifetimes, on average in a typical market, homeowners will spend seven months planning and preparing to sell their home, and three additional months with their home listed, pending, and closing.
What follows is a breakdown of what a homeowner can expect when determining the cost to sell a house.
The Cost of Selling a House: The Common Expenses
Some expenses are common, and you can expect to pay them when selling a house. Some costs may be hidden or not commonly considered.
The typical cost to sell a house includes:
- Agent Commissions- The seller's agent typically charges 5 to 6% of the home's purchase price when the deal is completed. This is likely the highest cost you'll pay, aside from paying off your mortgage. When shopping for an agent, ask them about their commission fee. Some may be willing to negotiate their rates. Make sure you get any agreement in writing. The seller's agent may split their commission with a buyer's agent, but this does not affect you.
- Taxes and Neighborhood Fees -You'll owe a prorated share of your property taxes when you sell. This amount might be close to zero if you've recently paid your taxes or several thousand dollars if the due date is coming up. In some states, you may also be charged a local transfer tax. This is a fee the seller pays to transfer the title to another person. Depending on the location this tax is typically .01% to 2% of the final sale price. If you profit more than $250,000 ($500,000 if married) you may also be liable for capital gains taxes unless you can use a 1031 Exchange. You may also be liable to pay a prorated membership fee if your neighborhood has a homeowners association and possibly an HOA transfer fee.
- Title Insurance for the Buyer - This is protection for the buyer in case there is an issue with the home's ownership. Buyers may also purchase a title policy if they apply for a mortgage, but this policy protects only the lender. In some areas, the seller pays for a separate policy for the new homeowner. The average cost is around $1000.
- The Mortgage Payoff - Unless you own your home outright when you sell you'll need to pay off your lender. The payoff amount may be different from the balance due listed on your last mortgage statement because of interest charges. You'll want to know the exact payoff amount. If your mortgage has a prepayment penalty, that will be added to the amount due.
- Home Repairs - Your buyer will most likely order a home inspection before closing. If the inspection finds any issues, you may be asked to pay for any repairs.
- Moving Costs - Whether you buy and pack your own boxes and rent a truck or hire a moving company, you'll want to budget for your move after the sale is closed.
The Cost of Selling A House: The Optional Costs
Depending on how competitive your local market is, it may make sense to pay for extra services to attract more potential buyers. Many of these are optional, but they can help alert you to potential problems and help make your home stand out from others in the market.
- Pre-Sale Home Inspection - This one is strictly optional, and it can cost you around $400 or more, but it can be worth it. Some sellers choose to make this investment to find any significant structural or mechanical problems before a potential buyer does. Getting a pre-sale inspection allows you to make major repairs ahead of time. This removes the possibility of a buyer demanding them or using them as a negotiating tool to lower the price. Discuss this with your real estate agent. Remember, if the inspection reveals material defects, you'll need to repair or possibly disclose them, depending on your state's disclosure rules.
- Home Staging - It's always a smart move to remove clutter and give your home a good deep clean before listing. Your agent may suggest going a step further and hire a home stager to make your home more appealing. A stager may re-arrange your existing furniture, change your interior design and replace old worn furniture. The typical cost is $500 to $2000.
- Buyer's Closing Costs - Buyers are typically responsible for mortgage fees, home inspections, and appraisal expenses, which can often add up to be 2% to 5% of the final selling price. If you're in a slow market, or your buyer is on the fence, you can offer to pay some of these closing costs to help seal the deal.
Selling your home can be challenging and exhilarating at the same time. In today's super hot seller's market, it can also be lucrative. If you are planning or considering selling your home, make sure you factor both the typical and potential cost of selling a house into your plan. A REALTOR® can help you to better understand the exact cost of selling your home.
If you're considering selling your home, contact the REALTORS® at Masiello Residential Real Estate. We can help you get the best price for your New England home, can assist you to find the perfect new home to meet your needs, and understand the true cost of selling your home.