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So you’ve finally found the house of your dreams and you are ready to move. All you need to do is sell your old home and move. Selling your house means you just list it for sale and find a buyer, right? Nope.
There are expenses you will need to handle. We’re going to try and answer that all-important question for you: How much does it cost to sell a house?
Studies have shown that homeowners end up spending around 16 percent of their property value in the course of selling their home. According to a study conducted in 2018, the average cost of a single-family home is approximately $248,000. The average expense incurred to sell a home of that value is around $41,000.
A major chunk of that money, around 5 to 6 percent is real estate agent commissions, depending on your location. The remainder is split between repairs and home improvements, moving costs, and closing costs, amongst other things.
Of course, this does not account for the time and effort you need to put in to find a buyer who qualifies for a mortgage and to close the deal.
Let’s try and break down these costs, so you know what you have to prepare for before you make your big move.
Getting your home market-ready
Before you put your home out on the market, you’ll want to ensure your home is appealing to prospective home buyers. Here are the areas you’ll need to concentrate on to get top dollar.
Make sure you work on the outwards appearance of your home, or your curb appeal, as it is popularly called. The main thing you need to get in place is landscaping, which includes your lawn, trimming shrubs, making sure your flower beds look attractive, etc. If you have already been maintaining your garden and need just a touch-up and a little bit of tweaking, it should not cost you more than a few hundred dollars.
However, if you need a more comprehensive service, such as a new lawn, trees, shrubs and flowerbeds, be ready to cough up close to 1% of your property value. This amount may go up, depending on the size of your yard and the amount of work required.
Repair and Maintenance
Try and take care of any nagging home repairs and maintenance issues before you put your house up on the market. It’s important to have your home as quirk free and functional as possible because maintenance issues are one of the main reasons for home sales falling through before closing.
It would be advisable to make a checklist of all the things that need attention and get them sorted in an orderly manner. Getting a home inspection done is a great way to determine the amount of work required in your home. How much those repairs cost will depend on the scope and amount of work needed.
To Renovate or Not to Renovate
If you have the time and the money to spare, see if you’d like to make any home renovations before you sell your house. For example, a newly renovated kitchen is normally a positive factor for potential buyers. Most home renovations only increase your home sale value, so it’s definitely a positive investment.
However, considering a minor remodel could put you back as much as $21,000, it would be wise to choose what you want to renovate. If an entire kitchen renovation is not going to fit your budget, then concentrate only on aspects that actually need attention and would make a positive impact, such as new kitchen cabinets, a new coat of paint and maybe a brand new backsplash.
Staging your home is probably the most important part of prepping your home to be sold. Staging involves showcasing your home in a manner that allows your home’s best features to stand out, making it aesthetically appealing to buyers. It involves a fair amount of work and an eye for detail, as each portion of your home will need individual attention. The average cost of hiring a professional stager to work on your home could cost anywhere between $2,300 and $3,200. Doing it yourself, in this case, would help you save money, just as long as you have the time.
But even if you do it yourself, you’ll still have to spend on paint, new furniture, new lights and fixtures, deep cleaning for your carpets, new curtains, etc. But while staging your home may cost you as much as 1% of your home sale price, it is definitely a worthwhile investment. A study conducted by the National Association of Realtors (NAR), sellers agents reported an increase in between a minimum of 1% to a maximum of 10% in the dollar value offered for a well-staged home.
Costs once a buyer has been found
Once your home is ready to be sold, the next phase is waiting for the right buyer to make you an offer. After you accept an offer from a buyer, both your agents will go through the motions of haggling over the price until an agreement acceptable to both parties is reached. This is when you incur the next round of costs.
Your largest single expense will be paying your agent who did all your legwork for you, including handling documentation, showing your home to buyers, updating your listing, etc. For the considerable amount of work taken care of for you, you will be parting with between 5% to 6% of your property sale value as commission fees. You could forgo this cost, but if your buyer has an agent, you’ll still end up paying 2.5% to 3% of your sale price to your buyer’s agent.
Further Buyer Fees
You could offer to pay certain fees for the buyer, such as inspection fees or processing fees, to make the deal irresistible. These are called seller concessions. The amount of concession a buyer can request is usually dictated by their loan type. This is usually around 1.5% to 2% of the sale price.
Closing costs, which may be between 1% to 3% of your sale value, are costs borne by both the buyer and the seller. These costs include attorney fees, closing fees, property taxes, a transfer fee, recording fees, and any costs to pay off your mortgage on the property you’re selling.
The transfer tax you pay depends on which state you live in, and can vary from 0.01% to 5% of your sale price.
If you’re pre-closing on your mortgage, there will be an additional penalty of 2% to 4% of your original loan amount.
A title insurance or buyer warranty could put you down between $300 to $600.
Add an additional 1% to 2% to cover the costs of your moving to your new home. Of course, this cost could vary depending on how far you’re moving.
Selling a home and acquiring a new one are no easy tasks. Like all other real estate transactions, selling a house requires a keen eye for details and knowledge of procedures to be followed. We hope you’re now more aware of those procedures and the allied costs involved.