It seems to be a straightforward thing, right? You are moving or you have a property you inherited or just don’t want anymore so you decide to sell it. Just call an agent, put it on the market, sell it, collect your money and move on. Unfortunately it’s not always that easy. There are several costs you may have to budget for before you can safely and legally sell your house. Here is a list of 10 of the most common costs you need to be aware of.
-
Your Loan Payoff Amount
Unless you purchased your home for cash or inherited the property you probably financed it. If you have been paying that loan for a few years before you decide to sell there is usually a good amount left on that original purchase loan. If you bought a home for $100,000, put down 20%, this leaves $80,000 and over the years you have paid another $10,000 then your loan payoff amount would be $70,000. Traditionally this payoff amount will come from the proceeds of your home sale.
-
Taxes
Like buying or selling anything there are always State and local taxes to be paid for selling your home. It varies depending depending on where you live, but if you sell your home for more than you paid for it, that counts as a capital gain and it needs to be reported on your federal tax return. Sellers also need to remember that property taxes may also apply and they could be held responsible for a prorated portion of the property taxes up to the closing date. Many states charge a transfer tax that can range from .01% to 5% of the sales price.
-
Title Insurance
You have to own your property, free and clear to legally sell it. To ensure that the Title is free of piles, defects or leans against the title you can pay for your closing attorney to do a thorough investigation of the title to make certain that it is clear.. This ensures that the buyer can not hold the seller accountable for any liens against the property and the responsibility is now on the title company.
-
Liens against the property
As stated above you have to own the property free and clear of other commitments before you can sell it. If, after the Title company does a search they find that there are issues that need to be handled before you have a clear title you will have to take care of them before you can sell. sewer, trash, and water companies are common liens against properties. HOA fees or lawsuits have to be satisfied before selling.
-
Additional Attorney Fees
This is usually pretty specific to the state you live in. In some states it is customary for the buyer to pay the attorney fees and in some states it is the sellers that are responsible for the fees. In some cases both parties will split these fees.
-
Agent Commission
If you are using an agent or a brokerage you will have to give them their cut of the selling price. This is usually between 6-10% and it’s usually negotiable.
-
Repair requests from the buyers home inspection
Unless you can find someone ready to buy your home in an as-is condition, you will probably be responsible for fixing things that the buyers find in their inspection. This is sometimes negotiable, but it could take a good amount of money off of the final sales price if you don’t pay for it up front.
-
Pre-sale home inspection
A presale home inspection is strictly optional, and it could cost around $400 or more. So why would you pay for one? Some sellers make the investment because they want to find out about any structural or mechanical problems with the house before a potential buyer comes in with his or her home inspector.
-
Utilities
Even if you aren’t actually living in the house while selling it you will want to maintain the utilities. Showing a house without lights or air conditioning is extremely difficult. If the buyers and inspectors can’t test the water and plumbing it will look pretty suspicious.
-
Cleaning and Staging
You are far more likely to sell your house faster if it is clean and free of clutter. While this is something you could handle on your own for free, some projects are larger than others. If you are in possession of a property that has been lived in hard, it may be more efficient to hire cleaners. You might even have rent a dumpster to get the house in viewing shape.
There may be several more costs that you will have to cover. Depending on the state where you live, it is important to do your research and know in advance how these costs will affect the amount you will pay. As well as, how much you will ultimately get after selling your home.