- Posted by Benjamin Williamson in Real Estate
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Looking at the costs of selling a house
When it comes to the preparations for selling your home, you’ll probably 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 commission for a REALTOR®, or real estate agent, will be your first expense. It will typically cost between 5 and 6% of the sale price. Even if you need to pay REALTOR® or agent 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® or real estate agent.
- Sometimes, a buyer’s representative won’t show houses if there isn’t a selling agent.
- Selling a by-owner (FSBO) home may cost you more in the long term.
- Agents can negotiate for you and ensure you receive a fair price.
- When it comes to preparing your house for sale, real estate agents can provide valuable guidance.
You can list your home without the help of a real estate agent. However, if you want to save on the cost of a real estate agent, then you should be able to manage all negotiations, valuations, and paperwork yourself.
Pre-inspections typically cost between $300 and $500. A pre-inspection can seem unnecessary, but it could be a worthwhile investment. Potential home buyers often back out when they discover unexpected problems with their home appraisals or 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 appraised value and purchase price that can be offered in a seller concession, they won’t stop you from spending a lot. If the mortgage is a conforming loan, the seller can contribute as much as 9% with a downpayment of less than 25%.
You can negotiate better if you know of potential issues and have already incorporated them into your home repairs budget or terms.
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.
Home improvements and repairs
There are many home improvements that can increase the value of your house before you sell it. Not all renovations are equal before selling. Kitchen renovations can be very cost-effective and increase your home’s value. Windows, however, are a big money sink. On average, you’ll spend about $4,000, which will likely be a worthwhile investment.
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 your house as is.
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 of 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.
With effort and preparation, staging a home is possible. It costs around $2,000 per month, assuming it is only for one month, including the furniture rental fees. The cost for a stager who will only declutter and arrange is typically around $800.
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 your home must look its best for any photos.
Keeping the utilities on
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 in that space.
You will need to ensure that your utilities work 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.
A home warranty gives peace of mind to a buyer 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.
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
It’s not just buyers that have to deal with closing costs. There may be a transfer tax or a prorated tax on your property. The amount of this tax varies depending on where you live, so check the regulations in your 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. 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 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.
You will need to repay the loan balance if you have a mortgage on your house. In most cases, you can pay off the mortgage balance from selling your house. You can also use any extra money to make a downpayment on your new property. If you cannot sell your house at the expected price, 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.
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 it 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.
Calculating Total Costs To Sell A House
|Cost of selling a house:||Seller’s costs:|
|Agent commission fees||$12,500|
|Repairs and improvements||$4,000|
The cost to sell a $250,000 home might cost as much as $31,066 by this estimate. Of course, the seller could forgo some of the above expenses to try and reduce their selling costs. This is why it’s an excellent idea to create a budget for how much you want to spend on the property before beginning the selling process and calculating the desired listing price.