So, you’ve decided to sell your house and go on a new adventure, but you’re wondering how much it would cost to sell a home, right?
Some sellers may not understand how much money they can put into their house sale until it’s too late and they’re at the closing table. That won’t be you, however!
Plan ahead for selling costs by creating a budget to smash your home-selling objectives and win with money. We’ll show you how much it costs to sell a home on average so you can batten down the hatches and navigate the stormy waters of real estate.
Read on for our full breakdown of all the home selling fees and how they work.
The Primary Cost to Sell a Home: The Real Estate Commission
Let’s start with the most significant fee on the list, and that’s the real estate commission.
The real estate commission is typically the most expensive charge a seller pays, ranging from 5% to 6% of the selling price. You may wind up paying $15,000 in commissions if you sell your home for $250,000.
The commission is divided between the seller’s and buyer’s real estate agents.
However, you may be able to negotiate a lesser commission. Real estate brokers are more inclined to accept a lower fee when the property is anticipated to sell fast; the local market is strong, or the home price is relatively high.
Real Estate Auction
If you are trying to save some time and cash you should consider selling at auction. Real estate auctions offer a great way to sell your property quickly and for top dollar. The cost of a real estate auction is typically much less than a traditional sale and the process is much faster. Plus, you can reach a much larger audience of potential buyers and get more competitive bids.
The auction process is also very transparent, so you know exactly what you’re getting and when you’ll get it. Plus, you can set a reserve price so you always get the minimum price you’re willing to accept. So if you’re ready to sell your property, a real estate auction could be the quickest and most cost-effective way to do it.
The Pre-Sale House Inspection
A pre-sale house inspection is entirely optional and may cost up to $400. Some sellers spend because they want to know whether the property has any mechanical or structural issues before a prospective buyer arrives with their home inspector.
Getting a pre-sale inspection lets you perform significant repairs ahead of time, eliminating the risk of a buyer requiring them later or requesting a price reduction.
Consult your real estate agent to see whether a pre-sale house inspection is necessary. Keep in mind that if the inspection uncovers significant flaws in your property, you may be required to report them to a potential buyer, depending on your state’s disclosure regulations.
The Bulk of Necessary Home Repairs
If you’re thinking about selling your house, there are probably some things you can do to make it more appealing and possibly increase its worth. Now is the moment to spruce up the outside of your home, paint the inside, or fix a stairway or a leaking faucet if you’ve been putting it off.
In addition, if the buyer’s house inspector discovers concerns such as a leaky roof or faulty plumbing, you may be required to pay to repair those issues to complete the transaction. Extensive repairs may be costly, so budget for them before you decide to sell, particularly if you anticipate problems to surface during a house inspection.
Also, you’ll want to avoid these mistakes when you’re selling your home. So, keep them in mind.
The Costs of Home Staging
Buyers prefer to imagine what a home will look like when they move in, so investing in aesthetic improvements like fresh, light paint and new flooring is beneficial if you’re a seller.
Adding fresh plants or flowers to the front of the house may also help to attract buyers without spending too much money.
Finalizing the Mortgage Payoff
you will pay off your mortgage with the proceeds of your house sale, but the payback amount on your mortgage statement is likely to be less than what you owe. You’ll almost certainly have to include prorated interest in the overall amount.
Additionally, if your mortgage has a prepayment penalty, you may be required to pay a charge. Check your loan papers or call your current lender to see whether this condition is included in your loan.
The Closing Costs and Additional Charges
In a real estate transaction, the buyer bears many closing expenses, but the seller handles other closing charges.
If you’re attempting to sell your house in a buyer’s market, don’t be shocked if you’re requested to cover part of the buyer’s expenses as well.
Homeowners association fees, property taxes, legal fees, transfer taxes, and title insurance are examples of these expenses. You may be charged an escrow cost, a brokerage fee, and a courier fee as well.
Many of these charges are negotiable, and it’s doubtful that a seller would be liable for them altogether. Even so, being prepared is beneficial.
Capital Gains Tax
Remember to factor in taxes. A capital gain occurs when you sell a property for more than you bought it for, and it may be required to be declared on your federal tax return.
The good news is that many homeowners may deduct up to $250,000 in profit and $500,000 for married couples filing jointly from their primary residence from their taxes. If they haven’t utilized the tax break on another house sale in the previous two years. If it was your primary residence for at least two of the preceding five years, you are eligible for a tax reduction.
Sellers should also consider property taxes, which vary depending on whether they are escrowing into their mortgage.
Taxes on real estate are typically paid in advance. The seller shall pay the prorated portion of property taxes up to the closing date, and the funds should be deposited in escrow.
If you’re selling your house and have already paid your taxes for the year, you may be eligible for a refund at closing. The buyer shall refund the seller for any taxes already paid but are due after the closing date.
Home Selling Process: Simplified
When you’re on the market and trying to sell your home, things can appear to be more complex than they need to be.
Hopefully, when it comes to the different fees you need to be aware of, our guide has shed sufficient light on the process and the cost of selling a home.
And, if you liked reading our article, then you’ll love checking out our additional tips and strategies. All of them will be available to you in our real estate section.