Selling Your Home? Prepare for these Hidden Costs.
Posted On May 02, 2018
Need to sell your home this year? With limited for-sale inventory, some housing professionals are calling it a seller’s market. While many sellers stand to profit from the sale of their home, there are still costs associated with selling. The majority of sellers who sold a home in 2017 had never sold a home before.
To a first-time seller, some of these costs may come as a surprise. If you are selling a home this year, be sure to factor in these selling costs.
Both buyers and sellers pay closing costs when a transaction is complete. For the home seller, these costs may include the real estate agent’s commission, loan payoff costs, transfer taxes or recording fees, title insurance fees, and attorney fees. In some cases, the seller also pays for some or all of the buyer’s closing costs, depending on the deal. Zillow reports the closing costs on a median-valued home is about $13,357. In high-cost areas like San Jose, CA, closing costs can exceed $70,000, while in states without a transfer tax, like Indiana, closing costs can total as little as $8,604. Consult a real estate professional to determine the average closing costs in your market.
Cost of Prepping the Home for Sale
The cost of preparing the home for sale will vary based on the type of work needed. Some home sellers who are no longer living in the home will pay staging, cleaning, or furniture rental costs, to make the home look appealing to buyers. If the home needs structural repair to pass inspection, these costs should also be considered. In some cases, especially if the buyer is choosing to finance through a renovation loan, the seller will not need to complete the repairs. Prep costs will differ based on the nature of the transaction and the agreement between the buyer and seller.
Real estate resources like Realtor.com and Redfin estimate the average real estate commission to be between 5% and 6% of the home’s sale price. In most cases, the buyer’s agent and seller’s agent receive equal shares of the commission. The commission, usually included in the closing costs, is paid by the home seller to both agents.
Selling costs vary from region to region, and the figures reviewed here are based on averages and estimates from around the country. If you are considering selling a home this year, consult with a trusted real estate professional to get an accurate estimate of selling costs. Zillow Group reports 71% of home sellers are simultaneously looking to buy after they sell and 79% of buyers get preapproved for a mortgage. Do your due diligence now for a smooth move later.