True Costs of Selling a Home

Selling a home is an exciting milestone. While many believe the buyer holds the financial burden, it's important to understand there are also financial obligations for the seller to ensure a smooth and profitable experience. While the sale price often grabs attention, the 'true cost of selling a home' involves several key expenses that every seller should plan for. If you're thinking of selling a property, read on to know what you can possibly expect when selling your home.
Agent Commission Fees:
Real estate agents typically charge a commission of 5 - 6% of the sale price, which is split between the buyer's and seller's agents. For a $400,000 home, this could mean $20,000 – $24,000 in commissions. Commissions are negotiable, and agents may accept a lower commission than the national average. If you're selling the traditional way, be sure to set aside money to pay for agent commissions.
Home Repairs and Improvements
Pre-sale touch-ups can help your home stand out, and homes that have been updated or remodeled will certainly catch the eye of many buyers; but they come with a cost. Common expenses include:
Minor repairs: $500 - $2,000
Staging: $1,000 - $3,000
Larger upgrades (e.g., a new roof): $5,000+
Closing Costs:
When it comes to selling a home, there are fees and expenses associated with the sale called 'closing costs.' These fees and expenses are generally paid for by the buyer and seller and range between 2 - 5% of the loan or sale price (but know, each transaction is unique and the party that pays these costs is generally negotiable). For sellers, the most common closing costs include (and are not limited to): title insurance, taxes and fees, and seller concessions (inspections and improvements). Costs are dependent on location, but they can range from:
Title insurance: $1,000 - $4,000
Transfer taxes: Varies by state
Escrow fees: $500 - $2,000
Moving Costs:
Unless you're moving to the house next door, moving to your new property will have some kind of cost. Whether renting a trailer, moving truck, or shipping container, or hiring a moving company, relocating your belongings can cost anywhere from $1,000 for a local move to $10,000+ for long-distance relocations. If you know you're going to need to rent a truck or hire a company, begin your research ahead of time to avoid sticker shock.
Mortgage Payoff:
For many Americans, buying that home or property required a mortgage loan. If you still owe money on your mortgage, don't forget to account for the remaining balance, plus any early repayment penalties.
Selling a home is a significant financial decision, and understanding the full picture can help you maximize your profits. If you're thinking of selling, you can save on selling costs by comparing and negotiating on agent fees/commissions, be proactive and fix any minor issues prior to listing, and negotiating buyer requests for closing costs or repairs.