The first thing that comes to mind when you set out to sell your home is most likely “how much money am I going to make selling my home?” Sure, your profits will be significant and you’ll have cash to purchase a new house, but you might not realize that selling your home will most likely cost thousands.
Sellers should expect to pay around 10% of their home’s purchase price at closing time. That means that if you sell your home for $250,000, you could end up losing around $25,000 of that equity. While some expenses are negotiable and depend on the state of the real estate market, it’s best to familiarize yourself with what to expect so you don’t experience extreme sticker shock. Here are the major costs you’ll probably see when selling your home.
What are typical real estate agent commissions?
The biggest chunk of the money sellers pay is the commission for the agents, and since 91% of home sellers use a real estate agent to execute their transaction (according to a National Association of Realtors statistic), you’ll probably be faced with this fee. Commission typically ends up costing around 5% to 6% of the purchase price, and those funds are split between the listing agent and the buying agent.
For example, if your home sells for $250,000 you’ll face an agent commission price of between $12,500 and $15,000.
Homeowners sometimes attempt to cut out this expense by offering their house as a for-sale-by-owner property. Sellers who do this must be prepared to take on the full list of duties of a real estate agent, including marketing the home, showing it to buyers, negotiating the best deal and executing the title transfer.
Instead of taking on the major headache of DIY home-selling, consider selling with Door.com for a low flat fee instead of a high percentage of your home sale.
Repairing your home
Enhancing the look of your home in an effort to increase its value is a common practice for home sellers. Whether you’re increasing curb appeal with an updated patio, redoing your floors or getting a new paint job, you’ll likely have several projects in the pipeline before your home goes on the market.
The buyer will most likely conduct a home inspection, and you may have to pay for any issues that the inspector finds. Be prepared to take on big repairs that may or may not come up in the selling process before you decide to sell.
Should I sell my home with a warranty?
Sellers might consider offering a home warranty to sway potential buyers in their direction. According to a recent survey, the majority of homes sold with a warranty sold faster and at higher rates than those that did not have warranties attached.
If you wish to tack on the added value of peace of mind the buyers might need to close the deal, you can purchase a home warranty through an insurance company or bank for around $300 to $400.
Staging your home for sale
Hiring a professional stager before buyers step foot in your home is often a good idea because it enhances your home’s features and gives buyers a chance to imagine the property as their own.
A staging company may add, take away or simply rearrange furniture, declutter and depersonalize living areas, give each room a purpose and downplay the home’s undesirable features.
The cost varies based on the size of the home and how much work the company will need to put into it, but the service costs an average of around $1,200. However, if you choose a Door.com package that includes our staging features, you may not have to hire an outside professional.
Even if you plan to move out of the home while you are selling it, you’ll have to keep the lights on. Set aside a little money to continue paying the electricity, water and gas bills so buyers aren’t turned off by touring a house in the dark. You can budget by looking at your current bills and determining how much it will cost to leave the utilities on each month.
Paying off your home loan
The money you make from the sale of your home will be used to pay off your mortgage, but you’ll probably have to pay more than what your balance states.
Check to see if you have prepayment penalty tacked on to your mortgage. If so, the lender may penalize you when you pay the balance in addition to a charge of prorated interest that you’ve accrued over the life of the loan.
What are seller closing costs?
Home buyers usually face between 2% and 5% of the purchase price in closing costs, but sellers aren’t off the hook either. You can expect to pay an average of 1% and 2% of the purchase price in closing costs, including:
- Escrow fees: Any money that goes into an escrow account has a fee associated with it, and the buyer and seller usually split it.
- Property taxes and HOA fees: You might be required to pay a prorated amount of both of these expenses.
- Transfer tax: The transfer fee, which can occur when the taxes are transferred into the new owner’s name, is typically a purchase price percentage. However, not all cities and counties charge this fee so you’ll have to look into your area’s policies.
- Buyer title insurance: The title insurance protects the buyer in case any liens or issues arise with the title of the home.
You may even be asked to foot the buyer’s closing cost bill, but if you’re in a seller’s market you might choose to not accept the terms. If you’re selling your home in a buyer’s market, however, agreeing to pay at least a portion of the buyer’s fees to close the deal.
A good real estate agent will negotiate on your behalf to make sure you keep as much equity as possible. Contact a Door.com Agent today to find out how we can utilize our expertise to ensure you get the best deal.
Door.com is a next-generation real estate transaction platform designed to improve the client experience and reduce the costs associated with buying and selling a home. Door.com, Door.com Mortgage and Door.com Title deliver customized services with a team of full-time experts who use the best in technology to support the way you buy, sell and live with your home. Door.com operates throughout every major market in Texas (including Dallas, Fort Worth, Austin, San Antonio, and Houston), Georgia, Colorado and Florida.