REGION – While there is no set cost to sell a house, you’ll want to prepare for a range of 10-15% of the sale price. Home-selling costs include home preparations, vacating the home, seller concessions, closing costs for sellers, and real estate fees – loan payoff, taxes, and penalties.
Home preparations
Before your first open house or showing, consider hiring a house cleaner to do a deep clean. Costs will vary depending on home size.
Research has shown that just under half of buyers who purchase a home report staging was at least somewhat important to them. Home staging can take many forms, but at a minimum, you should declutter, arrange furniture to make the most of the space, and remove personal belongings. Landscaping is also important. Add flowering plants, create a walkway if you don’t already have one, rake any leaves, mow the lawn, light the walkway, and shovel snow in winter. Home improvements such as updates to repair or replace old systems, and upgrades like painting that add features buyers love, can also garner a higher sale price.
Photos of a property can also bring in buyers. Real estate photographers charge $100 per hour on average, according to Thumbtack. If you’re using a full-service listing agent, they may cover the cost for you. You may also want to consider pursuing 3D virtual home tours for your property.
There are costs associated with listing your home on the local MLS, but it is usually covered by your real estate agent if you’re using one. If you’re selling on your own — called for sale by owner (FSBO) — you can list your house for free on Zillow. If you’re selling on your own, you’ll also want to set aside some money to print flyers, signs and open house materials.
A preinspection is optional, but if you choose to do one before listing, you’ll know ahead of time about any major issues that need to be addressed, which can save a lot of negotiating with potential buyers down the road. The U.S. Department of Housing and Urban Development estimates the cost for home inspections ranges from $325-$375.
Vacating the home
Another type of expense you’ll need to budget for is moving — the costs related to actually vacating your home.
If you’re selling one home and buying another, it’s almost impossible to time the transactions perfectly so there are no additional housing costs. Most sellers leave their utilities on while their house is on the market, for showings and open houses. But be sure to shut off utilities as of the date you vacate so you can avoid unnecessary costs.
Moving expenses can vary dramatically based on the size of your home, how many belongings you have, and how far you’re moving. But whether you’re doing a DIY move, using professionals from start to finish, or something in between, there are always expenses associated with moving, and they often have to be paid before closing, so you’ll need cash available.
Did you know that your existing homeowners insurance policy may not cover your property when it’s vacant? If your home is going to be vacant for any period of time, it’s important to talk to your agent about adding a rider to cover that period.
Seller concessions
It’s rare that you receive the perfect offer and can close without making any concessions to the buyer, like the deal being contingent on the home passing an inspection.
Rarely does an inspection report come back perfect, so it’s common for buyers to request repairs from sellers. As a result of an inspection report, sellers often either lower the sale price so the buyers can make the repairs themselves, or have the repairs completed as a condition of the deal. As a way to sweeten the deal for potential buyers, sellers sometimes cover the cost of a home warranty.
Another concession buyers often request is that the seller cover all or part of the buyer’s closing costs, which effectively minimizes the amount of cash a buyer needs to bring to the closing. For the seller, this cost comes out of the profit you’ll make on the home on closing.
Seller closing costs
Average closing costs for sellers have historically ranged from 8% to 10% of the home’s sale price, including both agent commission and seller fees.
The majority of your closing costs come from paying commission to real estate agents. Historically, agent commissions have been between 3%-6% of a home’s sale price, but there is no set commission percentage. It’s also important to remember that commissions, and the types of services an agent offers, are negotiable.
A government transfer tax or title fee varies widely due to varying tax rates by state and the sale price of the home. In many markets, sellers also pay for a title insurance policy for buyers, which protects their interest in the home if there are issues with a disputed title or outstanding liens.
Settlement fees vary significantly by state, from $200 to the seller, up to 0.5% of the purchase price split between the buyer and seller. This can also include extra line items related to documentation and money movement.
You’re responsible for the property taxes on your home up until the day of closing, so once you close, you’ll see a prorated charge on your final settlement statement. That means you’ll still have to pay for the home’s property taxes equivalent to the number of days the house was still yours before the deal was finalized. Similar to property taxes, if you live in a community with a homeowner’s association, you’ll also be required to pay your dues, prorated up to the close date.
If you use the services of an attorney in your transaction, you’ll have to pay them at closing.
Real estate fees
Once the closing costs are settled, it’s not all profit. There are still a few more costs of selling a house that you need to be aware of. If you’re still paying a mortgage on the home, part of the closing process will include paying off the balance of your mortgage, prorated to the date of sale.
If you think you’re going to be subject to capital gains taxes, either because you’ve profited more than the set amount, or because you’ve lived in the home for less than two years, ask your tax professional about subtracting the costs of preparing the home for sale from your profits.
Article provided by Zillow Group.