Selling your home can be an exciting time, especially if you’ve built equity up over the years. Before you start counting your profits, you need to be aware of the costs associated when selling your property. Here are five expenses you can expect to pay when selling a house.
1. Repairs, Landscaping, and Revamp
Before you put your home on the market you need to walk through with a keen eye and take note of everything that needs to be done to prepare your home for the sale. Are all of the ceiling fans clean and working? Is the paint on the baseboards chipped? What about your curb appeal? Does the house need to be power washed? Is the mailbox crooked?
To get the maximum amount of money for your home, you’ll want to make these repairs. If there are any items that are not working or something that you have been meaning to do but never did, now is the time. At a minimum, we recommend shampooing carpets, repainting to a neutral color inside and even hiring a professional cleaning company to deep clean before you stage your home.
Homebuyers will most likely pay for an inspection before closing on the property and if there are any repairs required from the inspection, this is another cost to the seller before the property is sold. You may be able to avoid this delay if you pay for a pre-sale inspection on your own. Typical home inspections average $400. Keep in mind, you are obligated to disclose any defects your home may have. If you want to take it a step further and upgrade, check out this great list of smart additions to increase the value of your home.
2. Closing Costs
While home buyers typically pay 2% to 5% of closing costs, sellers should be aware of their part as well. Before you put your house on the market and start counting on your profits, know that closing costs for sellers can reach 8% to 10% of the sale price of the home. Here’s why. It’s higher than the buyer’s closing costs because the seller typically pays both the listing and buyer’s agent’s commission, which is around 6% of the sale. Additionally, the fees and taxes for the seller are an added 2% to 4% of the sale. You should not expect to bring cash to the closing though since costs are deducted from the proceeds of the sale.
So what are the fees made up of? A few things: agent commissions, transfer tax, title insurance, escrow and closing fees, prorated property taxes, HOA fees (if applicable for the property) and credits toward closing costs/seller concessions.
Agents Commissions: A large part of the cost of selling a home is in agent commissions. When you hire a real estate agent to sell your home for you, the typical commission is 6% of the final sales price. The seller’s agent will split this commission with the buyer’s agent.
What does it really take for an agent to sell your home? A lot. At Boeve Properties, we make upfront investments in Professional HD photos, Virtual tours, YouTube videos, Zillow, Trulia and Realtor.com contracts so potential buyers are routed back to us, For Sale Sign, Keybox, Fliers, Mailers, Facebook Ads, Google Ads, Home Stager, 24/7 call center and more. For 24 years, we’re consistently in the top 1% of all Realtors in West Michigan for sales volume, selling more than 70 homes a year. Learn more about ‘Selling Your Home the Boeve Way’.
Transfer Tax: A transfer tax is a charge to transfer of ownership or title from one party to another.
Title Insurance: Title insurance protects lenders and buyers from financial loss due to defects in a title to a property.
Escrow: Escrow is a third party that holds funds before they are transferred from one party to another. The funds will be withheld until both parties have fulfilled their contractual requirements. Most times, the escrow amount is split 50/50 between the buyer and seller.
Prorated Property Tax: Taxes cover the duration of the tax period. In the case of property taxes, government tax agencies or sellers may allow eligible individuals to save money by paying prorated taxes.
HOA Fees: Just like with property taxes, you’ll have to make sure you’ve paid HOA dues up to the close date. Be sure to read the policy again, too, some HOA’s also charge a transfer fee to transfer your property to the new owner. Read more about the pros and cons of an HOA here.
Credit Toward Closing Costs: Also known as ‘seller concessions’, this is money offered to the buyer to help with their closing costs. While it may sweeten the deal and result in a faster sale, it’s not always necessary.
3. Potential Prepayment Penalty
Before you move forward with the decision to sell your home, review the terms of your home loan to make sure you don’t have a prepayment penalty provision in your mortgage. Prepayment penalties, which usually decrease as the mortgage ages, require that you pay a penalty if your mortgage is paid off prior to the stated date.
If you plan to move out before you sell your home, you’ll want to continue to pay for standard utilities like water and electricity. Be mindful of the season, too, as a home without air conditioning or heat can be difficult to show to potential buyers. Your current bills will give you an idea of how much it will cost each month to leave on the utilities until a new buyer moves in.
5. Moving Costs
This is a given, yes, but the actual cost can be a surprise if you’re not prepared. Do your research ahead of time and get quotes for movers, boxes, packing materials, etc. Keep in mind, the further you’re moving, the more it’ll cost. Not sure how you’ll keep track of it all? Read Top 10 Ways to Maintain Your Balance While Moving.
Think you’re interested in putting it on the market to see what kind of buyers may be interested? Let’s chat! We’d love to come out and perform a free Predictive Market Analysis and share how we guarantee your highest sale price! Contact us here to schedule your appointment today.