Homebuyers pay around 12.3% of a home’s purchase price in closing costs.
Most people know that buying a house isn’t cheap, but many people don’t understand the total cost to sell a house.
When you consider selling a house, you should understand that you’ll have to pay some fees. The question is, how much will these cost?
Here is a guide to help you learn more about the expenses associated with selling a home.
Staging and Home Preparations
If you view home listings online, you’ll notice something. Most of the homes you see are turn-key properties, which means they don’t need any work. Does your home fall into this category?
Most buyers look for homes for sale that are up-to-date and modern. If your home isn’t like this, you might need to invest some money to update it.
As a result, selling your home might require spending money on updates, repairs, and renovations. Of course, the amount you spend on these things depends on your home’s current state and condition.
Real Estate Agent Commissions
Approximately 90% of home sellers hire a real estate agent for help with the selling process. Agents find buyers for these homes and earn a commission when closing the deals.
So, if you want to learn how to sell a house and the costs involved, you might want to consider this cost. The real estate commission you pay when using an agent is the most significant expense of selling a house.
Real estate agents charge different rates, but you can expect to pay at least 5% for the commission. This means that if you sell your house for $200,000, you’ll owe the agent $10,000 for their work.
You should realize that you can sell a house without paying the commission, though. So, for example, you could sell your house by the owner and avoid the commission.
You could also look for a company that advertises “we buy houses as is.” These companies pay cash for homes, and you can avoid paying commissions and other expenses with this method.
Prorated Taxes and HOA Fees
Another expense that many sellers fail to think about is the costs of prorated taxes and HOA fees.
You’re required to pay the property taxes on your house until the day you close the deal. As a result, you’ll owe the seller some money for the taxes. The same is true for HOA fees.
You must pay the buyer the accrued HOA fees and property taxes when closing. The buyer then becomes responsible for paying these bills when due.
Buyer’s Closing Costs
Depending on the real estate market and the current home selling prices, the buyer might ask for additional money from you. A common example of this is a buyer asking the seller to pay some closing costs.
You can find out when you receive an offer from a person. The offer will state if they ask for you to pay some closing costs. While this is not always an expense of selling a house, it is in many cases.
The buyer might ask for you to pay $1,000 or more. If you accept the offer from this person, you are responsible for paying this money at closing. Therefore, it becomes another cost of selling a house.
Another one of the common home selling fees you might encounter is title insurance. Title insurance protects a home’s title and comes in two main types.
First, the buyer gets a buyer’s policy, which protects them. Secondly, the lender gets a lender’s policy for their protection.
As the seller, you might have to pay for one of these policies or both. Again, it depends on what the buyer asked for in the contract.
Home Repairs and Contingencies
The next cost you might have with selling your home is the cost of repairs for the contingencies the buyer requested. A contingency is a condition or request, and these come in different forms.
For example, the buyer might state a contingency related to the home’s appraisal. This contingency gives the buyer a way out of the deal if the home’s value is too low. You wouldn’t have to pay anything for this condition.
However, if the buyer adds a contingency that requires you to replace the appliances in the home, you’ll be responsible for this cost. Some contingencies don’t require costs, while others do.
The amount you spend on these costs depends on the contingencies you agreed to in the contract.
Warranty or Inspection Costs
Finally, you can incur some expenses for inspections or services that you agree to pay. For example, are you offering a home warranty to the buyer?
A home warranty gives the buyer peace and assurance that they won’t have major expenses to pay for the appliances or systems in the home for the first year.
Offering a home warranty is a great incentive when listing a home, but it’s not free. You’ll have to pay the bill for the warranty if you offer one.
You might also have the obligation of paying for inspections the homebuyer needs or wants, such as a basic home inspection, pest inspection, or septic inspection.
The costs for these inspections vary, but they can add up if the buyer asks for multiple ones.
How Much Is the Cost to Sell a House?
When you add up these costs, you might see that selling a house is costly. How much will it cost to sell a house? While the answer varies, you can expect to pay a pretty penny.
You can reduce the selling costs by finding a cash buyer for your home. You won’t have to pay any of these expenses if you choose this method. Instead, you can keep the entire profit.
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