What are the real costs of selling a home?
Experts estimate that most people who use a real estate agent will pay up to 10% of their sales price in costs associated with the sale. The cost of selling a home yourself can range from 4% to 8% of the sale price of your home. When you are estimating your expected earnings, remember that the cost of selling a home can be deducted from that figure for tax purposes.
To give you an idea of what the costs of selling a home are in today’s market, take a look at the information below. We’ve included estimated costs based on the sale of a $ 250,000 home, as well as some tips for reducing or eliminating them to lower the total cost of selling your home.
Sales commission
If you list your home with a real estate agent, expect to pay 4-6% of the sales price, or $ 8,000 to $ 12,000 in real estate commission.
Tip: shop around. Real estate commissions are not set in stone. A real estate agent may be willing to accept a lower commission in a slow market, or they can save money by hiring a real estate agent only for specific services rather than a contracted listing.
250,000
-12,000
238,000
Closing costs
Taxes, both transfer taxes and property taxes, and legal fees associated with the closing and completion of the sale of your home will be 2% to 4% of your sale price, or $ 4,000 to $ 8,000.
Tip: Check the laws in your state. If you prepaid your property taxes for the year, you may get a credit instead of an invoice. There may also be other refunds on prepaid escrow costs for home insurance and other costs of selling a home.
238,000
– 8,000
230,000
Pay your mortgage
Whatever the remaining principal balance on your current mortgage, you will have to pay it off at the time of your home sale. To keep things simple, let’s say you still owe $ 50,000 on your current mortgage. If there is a prepayment penalty, you will also need to deduct it from your eventual sale price.
Tip: Ask your lender to prepare a payment statement so you can verify your figures. If a service fee is charged, you can deduct it as one of the costs of selling a home.
230,000
50,000
180,000
Repairs to your home
The cost varies widely depending on how old your home is and how well it has been maintained. At the very least, you should get a home inspection to identify any potential problems and avoid being surprised by the closing. You should plan to pay around $ 300 for a home inspection.
180,000
300
179,700
Presale facelift
Again, the cost varies with the work it takes to make the home look its best. Conservative estimate: $ 300 for new paint, screws and hardware, living room floor mat, and yard service.
179,700
400
179,300
Moving costs
The cost of moving from one home to another is included in the cost of selling a home. It can cost anywhere from $ 1000 to $ 12,000 for a cross country move. Let’s be conservative again – $ 3,000
179,300
3000
176,300
Other relocation costs
You may need to replace appliances, pay for school transfer or gym fees, or pay for storage of your furniture. There are many unexpected costs of selling a home that can amount to nothing or add up to a good deal of change.
Even without adding other relocation costs, you can see how the cost of selling a home can lower your final cash profit. The good news is that most of those costs are tax deductible.
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