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Congratulations on deciding to sell your home! Whether you\u2019re upgrading, moving to a new area, or simply finding a place that better suits your needs, moving can be a welcome change and an exciting time.<\/p>\n
A word of caution, though \u2014 selling your home isn\u2019t as simple as accepting an offer and pocketing the cash. Zillow actually estimates that selling a home costs $20,851, on average, while other experts estimate you\u2019ll pay 10% of your home\u2019s final sale price in closing costs.<\/p>\n
There are many hidden costs to selling a home but also some ways to reduce those costs. We\u2019ll guide you through all that in this article, so keep reading!<\/p>\n
Real Estate Agent Commissions<\/strong><\/p>\n Let\u2019s start with the largest cost of selling your home \u2014 commissions paid to your real estate agent and the buyer\u2019s agent. Commissions can sometimes be unexpected costs for home sellers.<\/p>\n Generally, each party \u2014 buyer and seller \u2014 has their own agent to negotiate and advocate on their behalf. Although commission rates can vary by state, you\u2019ll usually pay about 6% of the final sales price in agent commissions \u2014 with 3% going to your listing agent and 3% going to the buyer\u2019s agent. Thus, you, the seller, traditionally pay commissions for both agents participating in the sale.<\/p>\n For example, if your home sells for $200,000, you would pay $12,000 total \u2014 $6,000 to each agent. You won\u2019t need to pay for these commissions upfront, but they will be subtracted from your profit at closing.<\/p>\n Some sellers opt to do the work themselves and list their home as a for-sale-by-owner (FSBO) to save on commissions. If you opt for this route, keep in mind that buyers may still expect that you\u2019ll pay their buyer\u2019s agent commission of around 3% and that FSBOs typically sell for less.<\/p>\n A happy medium may be negotiating a lower commission or working with a flat-fee agent \u2014 one who agrees to provide the same services as a traditional agent but for a lower, flat-fee commission. You may be wondering why an agent would agree to this: The answer is that they\u2019re usually able to receive a larger volume of leads and close more deals with this arrangement. It can be a win-win for both you and your agent.<\/p>\n Closing Costs<\/strong><\/p>\n On the day of your closing \u2014 the day you hand over the keys of your home to its new owner \u2014 you\u2019ll pay agent commissions, along with the rest of your closing costs. Lots of little fees and taxes add up to your final closing costs amount and, as a seller, you\u2019ll usually pay a lot more in these costs than the buyer, as theirs are usually associated with their loan.<\/p>\n Traditionally, you\u2019ll split some costs with the buyer \u2014 including title insurance. Before your closing, a title company will run a title search of your property, and whether the buyer or seller pays varies state to state.<\/p>\n A title search reveals any liens, easements, or unpaid taxes that may prevent the buyer from taking full ownership of the house. As their guarantee, a title company then provides title insurance \u2014 for a fee, of course \u2014 that protects both you and the buyer if anything was overlooked. The seller usually pays for the buyer\u2019s insurance and the buyer for the seller\u2019s insurance.<\/p>\n You\u2019ll also pay the transfer tax to legally transfer the title to the new owner and other real estate-related fees to your city, county, or state. You may also need to pay prorated real estate taxes depending on what month you sell your home.<\/p>\n Another cost to the seller is an escrow fee. This covers the cost of the agent or attorney who manages the holding and transfer of funds. Your settlement statement will tell you exactly what you\u2019ll pay at closing.<\/p>\n All together, these taxes and fees add up to around 2% to 4% of the sale price for a seller. Add this to your real estate commissions, and you can expect to pay 8% to 10% of the home sale price in closing costs.<\/p>\n Staging costs<\/strong><\/p>\n Seventy-seven percent of buyer\u2019s agents say a home that\u2019s staged helps buyers visualize themselves living in the home. Staged homes also sell more quickly and for a higher price \u2014 88% faster and for 20% more than non-staged homes, to be exact.<\/p>\n So, while you may balk at the price tag of hiring a professional stager, it will usually pay off, especially if you own a home in a higher price range. For example, it may cost you $1,000 or more in staging costs on a $200,000 home. But, you could get $40,000 more in the selling price. It\u2019s not hard to do the math and reach the conclusion that it\u2019s a good bang for your buck.<\/p>\n In addition to staging, you may also consider hiring a professional or renting a carpet cleaner to deep clean your home. Both these items help elevate the look of your home and alert potential buyers to the great care you\u2019ve taken of your home.<\/p>\n If you have pets, prioritize professional cleaning to help get out the animal smell, and consider paying to board them while potential buyers are touring your home.<\/p>\n Repair costs<\/strong><\/p>\n You\u2019ll come across two different types of repair costs when selling your home: repairs you make before putting your home on the market and buyer-requested repairs.<\/p>\n The first repairs are those you\u2019ll want to make before listing your home in order to entice potential buyers. Just like staging, making repairs before putting a home on the market can make it more intriguing to buyers. Work closely with your real estate agent to decide which projects you should take on based on how many upfront costs you can handle and how much time you have.<\/p>\n Your agent can also guide you to projects that may generate a higher selling price or may turn off potential buyers if not fixed. These may be major fixes such as replacing a 30-year-old roof or a full kitchen remodel or relatively cheap upgrades such as replacing stained carpeting or painting over that lime green living room.<\/p>\n Cost of these repairs can vary greatly depending on how well you\u2019ve kept up with regular home maintenance. If you\u2019ve deferred repairs and maintenance, plan to spend more. Although replacing an HVAC system could cost a lot upfront, it could generate even more in the form of a higher offer.<\/p>\n The second type of repair costs are those a buyer requests. After you\u2019ve accepted a buyer\u2019s offer, it doesn\u2019t mean you\u2019ll get to sit back until your closing date. Inevitably, when the buyer has the home inspected, they\u2019ll request at least some repairs.<\/p>\n Although you can always negotiate or flat out refuse the requests, it\u2019s best to work with the buyer so the deal doesn\u2019t fall through. Again, the dollar amount of these repairs varies greatly based on the age and upkeep of the home.<\/p>\n Moving costs<\/strong><\/p>\n Another oft-forgotten cost associated with selling your home is the price you\u2019ll pay to move your stuff from one home to another.<\/p>\n Moving costs may include renting a moving truck or crew, storage costs, and costs for staying at a hotel if you\u2019re moving across the country.<\/p>\n The average cost of an in-state household move is $2,300, while an out-of-state move is $4,300. Plan for even more if you\u2019re moving to another country.<\/p>\n Holdover costs<\/strong><\/p>\n Holdover costs are those bills you pay when you\u2019re technically inhabiting two homes. Unless you\u2019re able to pair up the closing dates of the home you\u2019re selling and the one you\u2019re buying (and are able to move in one day!), you\u2019ll likely have at least some overlap of bills.<\/p>\n These double payments may include mortgage payments, utility bills, homeowner\u2019s insurance, and possibly even real estate taxes. To cut down on these amounts, try to keep your closing dates as close as possible while still allowing enough time for your big move.<\/p>\n Plan ahead and be prepared<\/strong><\/p>\n Just by knowing what costs await you when selling your home means you\u2019re ahead of the game.<\/p>\n Planning ahead means you can make sure you have the upfront money needed for repairs to help your home sell and possibly reduce variable costs such as commissions and holdover costs. Happy selling!<\/p>\n