What Does It Really Cost to Sell a House?
Speak to anyone who has just gone through the process of selling their house, and more than likely, you will hear them talk about how many unforeseen costs they experienced before they even listed their home on the market.
Homeowners generally know what tasks must be completed before listing their home. This is often a primary reason that a homeowner might put off selling their home for a while; because they have a pretty good idea of how these costs can add up, or they do not have the time to complete these necessary actions yet. When they decide to list their home, they sometimes consider completing a few of the tasks themselves. While some of these projects can be completed alone, many of the tasks will require experts. Their fees and materials can sometimes add up to an amount of money that the homeowner did not anticipate.
Some preparations may be standard tasks that are not difficult to achieve, and do not cost as much. Others might require deeper investments concerning time and/or money. Here are some of the expenses you can almost undoubtedly expect:
1. Fresh paint. This is one of the most obvious improvements a homeowner knows they should make. What a lot of homeowners don’t know, is that the color choice is equally as important as the new paint itself. For example, while you may love maroon walls, a potential buyer has already made a mental note of what they are going to have to spend to cover it up, before they even assess the room in itself. Aside from the fact that dark paint colors also make rooms look smaller. It is extremely important to consider using neutrals when painting. This is a task that can be done alone, and while it will cost some money, it may save you a few thousand dollars.
2. Windows. Windows are a very important consideration when selling your home. Buyers want to see clean, transparent windows. While it may seem innocent, cleaning windows in itself can cost a few hundred dollars depending on the size of your home.
3. Standard touchups. Touchups are almost always necessary. These may include things such as stained carpets, broken molding, or hardwood floors that have faded, or have been damaged over time. There is practically no home that doesn’t require touchups, and while they may cost you some, they will make you some in return.
4. Home staging. Staging your home can always make a difference to a buyer. If you have the means, hiring a decorator can make all the difference. However, interior decorators have a bad stigma around them; most people think that they are extremely expensive to hire. While this is true for some, there are also many decorators out there that dedicate their business solely to helping homeowners on a budget. There are studies that have proven buyers pay more for homes that have been staged. Expect to pay a designer a few thousand for their service.
5. Adding decorative or new items to your home. If you choose to not hire a professional, you will still not be able to avoid purchasing the proper necessities and accessories. You should have clean towels in the bathrooms, replace any stained furniture, and consider hanging artwork. This is an important step in selling your home.
6. Landscaping. Landscaping is critical. Sometimes, your yard may require a professional landscaper. If the yard is in decent condition, it may be that you only need to plant some flowers or do general weeding and touchups. However, sometimes you may need all new grass. If you feel your yard may need a fair amount of work, consider meeting with a landscaper, or have a friend come over to give you an honest opinion on what you could do to make your yard look more inviting.
7. Pre-inspection reports. While having a professional inspect your house on structural matters is not required, it may be money well spent. A potential buyer most than likely will hire their own inspector to assess any existing damage to the home. It is important that you know of any structural issues regarding your home before they do. For example, maybe the roof has leaked a couple times, and you need a new one and were not aware of it. Buyers will come in and try to drive the price down for this, or, be put off by the home altogether after discovering an issue such as this. It is important that you be aware of any problems before a potential buyer has the chance to. An inspector can cost you around $200.
8. Lights and heat while the house sits empty. It is imperative that utilities be on on during the selling process, regardless of if you have already moved out. It is important to have the lights and water on in the home, as well as the air temperature setting that matches the season accordingly. Your realtor might need to show the home last minute, and the potential buyer will not want to walk into a dark, cold home.
Expenses You Can Expect at Closing
Although most of what you pay at closing time comes from the sale proceeds, the closing costs are where you really lose money. Here are some expenses that you can almost certainly expect at the time of closing.
1. Real estate agent commissions. As the homeowner, you will be paying commission that is to be split between your agent, as well as the buyer’s agent. This cost can vary, but generally it can come to 5-6% of the selling price. These fees can sometimes be negotiated; it is important to discuss possible negotiation with your agent before working with them, and definitely before signing any contract.
2. Other closing costs or credits to the buyer. Sometimes you can agree to pay some of the standard costs associated with closing the deal, such as fees for the escrow company, mortgage and home appraisal, and homeowners’ and title insurance. However, buyers may also ask you to pay all or a hefty portion of the closing costs. It is important to know that these costs can sometimes add up to 2% to 4% of the sale price.
3. Transfer tax. Your city or state may require you to pay transfer taxes as a small percentage of the sale price.
4. Home warranty for the buyer. Many sellers purchase a home warranty on the buyer’s behalf. This is a contract that covers repairs to appliances and certain systems within the house for the first year of ownership. This can run you a few hundred dollars.
5. Capital gains tax. If you earn less than $250,000 on your home sale, know that you won’t owe any capital gains taxes. However, if your home is sold at or above that amount, you may still not owe that tax if you’ve deducted things such as the costs of preparing the property for sale. This is something that you should look in to, in order to avoid paying fees that you may not have had to incur.
6. Moving costs. Depending on the size of your house, you might have no choice other than to hire a moving company. Depending on the size of your home, it can be a high expense that you may not be able to avoid.
Here is a great video that explains in further detail how much it costs to sell a home:
Here are some other great links to check out: