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How much does it cost to sell your home?

How much does it cost to sell your home?

When you sell your home you will find that there are several costs involved that soon start to build up.  Most people sell a home to make money rather than spend it but there will inevitably be costs involved and it is worth making yourself aware of these beforehand so you can plan your budget accordingly.

To help you avoid any nasty surprises when selling your property we have put together this quick guide to show you what the cost implications are, including issues of taxation, which can help you decide on how much money you will need if you go ahead and put your home on the market.

Getting the home ready for sale

There are many costs associated with getting your home ready to go on the market to be sure that you get the best price possible.

Making Necessary Repairs

There are some quick and easy repairs you can do to make your home more appealing to prospective buyers.  The amount you will have to spend on this will vary according to what needs to be done.  Go around your home and take a look at it from the buyer’s perspective:  What stands out to you?  It is well worth investing in mending that crooked door, getting rid of scratches, dents and anything that you can see and making sure that all the electrical, air conditioning, heating and plumbing systems are working well.

Consider Upgrades

Ultimately you want the very best return for any repairs or upgrades you make so look at smaller things that make the biggest difference.  Simply buying some new cabinet hardware in the kitchen can give the room a new look and taking a weekend out to put some fresh paint on the walls is a pretty cost-effective way of refreshing a tired looking area.

Although larger upgrades like a replacement bathroom or kitchen are likely to impress and possibly lead to a fast sale you will probably not see a good return on your investment because of the costs involved.  Meet with your real estate agent and have them point out the simplest and most beneficial ways of making your home stand out.

Clean and Stage Your Home

No one can envisage living in dirty, unkempt or scruffy homes so it will pay dividends to invest in hiring a professional cleaner to make your home shine.  This probably costs in the region of $200-$400 depending on where you live and how much work is involved.  Doing a basic clean yourself and having a professional deep clean the property can save time and money.

Staging is a skill that helps sell a home fast if it is done well.  Professional consultants usually charge somewhere in the region of $300-$600 for a consultation and this can quickly end up costing up to $10,000 if you contract them to stage your home.

Storage Costs/Housing Overlap Fees

When staging the property your best bet is to remove any extra clutter or things you don’t need.  All of those extra boxes you keep in the attic or basement should be removed along with extra clothes, household items and even some furniture.  Sellers still living in their home will often need to factor in storage facility fees.  If you have already moved you can avoid this cost but you will need to budget for two sets of household bills, property tax and mortgage payments.

Extra Repairs or Concessions

If the buyer’s home inspection shows up some things they are less than happy with they may ask for repairs or ask you to give them a concession on the sale price.  It may be worthwhile hiring an inspector yourself before you go to the market to try to preempt this.  Their fees are usually between $300-$500.

If you are selling in a buyer’s market the chance that you will be asked for concessions is quite high.  This is usually in the form of covering some closing costs or paying for inspection or appraisal feels.  This means setting aside around $500 or more in some cases.

Closing Costs

The normal range for a seller’s closing cost is 1-3% of the sale price of the home.  The fee will cover several things associated with the sale including:

  • Any HOA or property taxes due
  • Your attorney’s fees
  • Escrow – this can be between $500 and $2000
  • Some states and cities charge a title transfer taxation
  • Title insurance is usually paid now and ranges between $1,000-$4,000
  • Realtor’s commission – the seller pays for their real estate agent as well as the buyer’s which usually comes in at 5-6% of the total sale price.

Mortgage Prepayment Costs

Most sellers use the proceeds of a sale to pay off the mortgage so be sure to check the small print on your loan to avoid being caught out by a prepayment fee.  Mortgages vary so always double-check, for example, one company may expect you to pay around 80% of the interest you would have owed them if you had kept the mortgage for another 6 months, others charge a flat rate.

 Home Warranty Costs

Sometimes sellers are advised to purchase a one-year warranty which will cover them for the first year against any claims for repairs the old home may need.  Depending on location and the type of home the price can range from as low as $300 to around $900 to protect yourself for the first year.

 Capital Gains Tax

If you have lived in the home for a minimum of 2 years over the preceding 5 years then you will be exempt from capital gains taxes on the first $250,000 of your profit after sale expenses have been accounted for.  If you are married you should consider filing your taxes as a couple as this takes your threshold up to $500,000.  Capital gains may be charged on anything over these amounts at a rate of 0%, 15% or 20% depending on your net profit and your tax filing status.  If in doubt it is worthwhile checking with a professional before you go ahead and sell the property so you know what sort of costs you are looking at.

The costs of selling your home will vary according to how much you finally sell it for and, of course, that depends on many factors including the type of housing market you are selling in, the area you live and how much the property is worth.

 

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