You might think that, as a home seller, when you are ready to sell your house, you can just sit back and collect the money. After all, you made the monetary investment years ago when you bought the house. Maybe you have even upgraded your house so you price it even higher.
Unfortunately, there are several other costs associated with the selling process. If you want to keep as much money from the sale as possible you will have to budget for these costs upfront or pay for them out of the price of the ultimate price of the house when you sell the house.
The short answer is that you will probably need to count on paying nearly 15% of the home’s sale price—which includes agent commissions, home improvements, closing costs, and moving fees. So if you sell a home for $250,000, you might pay around $37,000 to cover selling expenses.
Here is how that might look when broken down:
Agent Commissions
When you hire an agent or broker to sell your house on the market you get a lot of marketing, advice, and an enormous network to help you sell your house. Agents typically make 6% of your home’s closing price in commission. This is usually split between the buyer and the seller so think of it as more like 3%. If you sell a $250,000 house, $15,000 of that will go to the real estate agents (or $7,500 each).
Major Repairs
Major home repairs can run you $4,000–20,000. This will cover anything you might need to fix after your initial home inspection. Note that selling your house at all may depend on making these repairs so they, for the most part, are not negotiable. If your house was recently built these repairs will most likely run you a lot less money.
Closing Costs
According to Realtor.com, sellers typically pay around 1–3% of the home’s sale price in closing costs. The term closing costs refers to fees for services that help to officially close the deal on a house. For sellers, closing costs usually include paying for an attorney, title insurance company, title transfer, and taxes.
Home Staging
When people come to look at your house you want to make it look as warm and inviting as it can so that potential buyers can picture themselves and their family living in it. This could cost you anywhere from $500 to $2000
Staging costs include things like hiring a staging company, ordering cleaning services, renting furniture, installing brighter lighting, updating cabinets, and applying a fresh coat of paint.
A lot of these might be things you can do yourself. Some real estate agents include the staging as part of their marketing services.
Moving Costs
Moving out of your house can cost you a lot of time, money, and stress. Boxes, trucks, and movers can all cost a good deal of money.
The larger your home and the longer you have been in it the most costly it will be to move out. Of course, you can save a lot of this money by renting the trucks and moving your belongings by yourself (or with the help of some very good friends)
Home Inspection
A home inspection can run between $250 and $500. It can reveal issues you might have with the plumbing, electrical, HVAC, or roof.
Anything found in the inspection will have to be dealt with in advance of the house closing. Often, the entire deal will be contingent on these repairs. At the very least, not addressing these problems will take a lot of money off of the final sales price.
As a rule, inspections are paid for by the homebuyer. It’s how they know what they might be getting into if they buy your house. However, you might want to get a jump on the process by hiring an inspection first, making the repairs, and moving the closing process along much faster.
Reducing the cost of selling your house and moving
There are two main ways to lower these costs significantly.
The first is to roll up your sleeves and do what you can do yourself. A lot of the repairs, new coats of paint, cleaning/staging, and moving can be a total DIY project.
Unfortunately, Major repairs to the roof, plumbing, and electrical need to be done by licensed professionals. Likewise, you cannot really inspect your own house.
The second way is to not sell your house on the open market. You could consider selling to a real estate investor. This for sale by owner approach means you save automatically on the commissions and closing costs.
Likewise, you could save a bundle on making big repairs, as most investors are looking for bargains and have the resources to make the repairs themselves