There are many reasons you might be interested in selling your home. No matter what your main motivation is, however, most people come into the process with some financial hopes.
The majority of sellers wait for favorable market conditions before they sell. Most invest at least a few dollars on refreshing the appearance of the home and raising curb appeal. Plus, it’s crucial to ensure you make enough on your sale to meet any outstanding obligations.
With that in mind, a difference of a few thousand dollars can have a major impact on your timing when going to market. Unfortunately, it’s easy to underestimate the costs of selling your home.
The cost of selling can be much higher than planned thanks to several factors:
- Repairs and Refurbishing
Sellers need to take time to triage any issues in the home and repair the ones they deem likely to affect the sale. It’s also essential to peruse recent real estate trends and determine how you can maximize your sales price through practical, targeted renovations. - Pre-Sale Home Inspection
These days, virtually all serious buyers will require a pre-sale inspection. A qualified inspector will examine every aspect of the home and disclose all issues. This is typically handled at the seller’s expense and costs a few hundred dollars to complete. - Real Estate Agent Commission
The average agent’s commission is around 5% or 6% of the total selling price. A healthy commission in line with industry norms is a good sign that you’re dealing with a reputable agent. You should scrutinize any agencies that offer very low (or very high!) rates. - Mortgage Payoff
The proceeds of your home sale must be sufficient to pay off your existing mortgage. Unfortunately, the “pay off amount” on your statement or borrower website is often inaccurate. Prorated interest for the most recent billing period and prepayment penalties (if any) can add to your charges. - Closing Costs
Closing costs are a common point of contention between home buyers and sellers. It may be possible to negotiate lower total closing costs or to get buyers to pay a bigger share, but you should be prepared to pay the entire amount if necessary – and that usually tallies up to 2%-4% of the total sale price. - Utilities
If you are planning to move out of your current home long before you sell it, it may benefit you to keep the lights on. It can be more difficult to show a home without electricity and water – and homes that have clearly been vacated are also more likely to be targeted by crooks. - Capital Gains Taxes
Taxes are a major issue for sellers. Selling a home for more than you paid for it may require you to report capital gains on your coming taxes. Luckily, most homeowners will find that they can exclude anywhere from $250,000 to $500,000 in real estate profit from this type of taxation. - Property Taxes
You will be responsible for property taxes at your current address until closing day. These taxes are usually paid on a prorated basis using money held in escrow. If you’ve paid your property taxes in advance for the year, however, you could actually receive a rebate at closing.
Getting an accurate estimate of the total cost of selling your home can be difficult. The potential costs vary widely based on your situation. That’s one more reason it’s essential to connect with a trustworthy real estate agent who can help you make informed decisions.
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