What Are the Costs of Selling a Home?
This will most likely be the largest percentage of your home selling costs. When a seller goes to a real estate agency, they are hiring two agents, the Seller’s Agent, often referred to as the Listing Agent, and the Buyer’s Agent, which is also sometimes called the Selling Agent (confusing, we know). The two agents split the commission, totaling 6% of the sale price.
If you are thinking of going with a Dual Agent, you won’t be paying less on commission because, in this instance, they just pocket the full 6%. Many people are wary of Dual Agents, and see their role as having a conflict of interest. In addition, it is generally not recommended to go with agents that offer a less than 3% commission, as this is often a red flag that something is not right.
Marketing and Staging
Selling a home is like a small business, and requires some up-front costs when it comes to the marketing of your home. When you hire a professional stager and a professional photographer to capture your home in the best light, it will not only help you to fetch a higher sale point for your home, but it will also get you to your best offer faster.
Considering the benefits of having these things done by a pro, the cost will end up being negligible. Home sellers should expect to spend between $500-$700 dollars on the marketing of their home.
Budget out repairs for both before your home gets listed and for a few more repairs during the negotiation process with the buyer. Before you even bring the real estate agent in, you should make a few repairs to the home. In the early stages, take care of the things you know about: things like the banister on the stairs, a paint job in a bedroom, torn carpet. But don’t expect to be finished at that point.
The Home Inspector will inevitably bring up problems you didn’t know about – problems with the heating, or with the electrical, for example. The buyer will likely request that you fix at least some of these before the contract is closed. If these fixes are small enough, below 3% or 2% of the sale price, go ahead and have them done. If the problem is larger, like something with the roof or foundation, you might forgo the repair and drop your sale price for the buyer.
Even if you’ve moved out of your home before selling it, you’re going to want to keep paying the utilities. The home buyer and the home inspector are going to want to check each socket and each light switch to make sure they are working. The heat and light are an essential part of showing your home.
Paying Off the Mortgage
If the final purchase price of selling your home is going in part to pay off the mortgage, expect to incur some fees in the process. Many mortgages have penalties for paying off early, and you may be asked to pay the interest you would have received if you were still paying.
While traditionally it is common for the buyer to pay the closing costs, this is not always the case. Often first-time buyers or those struggling to get into a home will try to negotiate a way for the seller to cover those costs in exchange for a higher purchase price. Closing costs refer to a wide range of fees, including attorney fees, escrow, brokerage, courier fees, property taxes, and title insurance. Depending on your home, you may have Homeowners Association (HOA) fees. Buyers may bring up covering all or some of these fees during negotiation.
Considering all of these costs, the average home seller should expect that their costs will likely add up to between 8% to 12% of the sale price of their home. The biggest costs end up being the real estate commission (at 6%), and the next biggest cost ends up being the repairs needed on the home (a 2% to 4% cost). After that, there is the possibility of paying some of the closing costs as well (another 2% to 4%).
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