Selling a house isn’t always a straightforward transaction. There can be a lot of moving parts like home repairs, realtor commissions, and local taxes to consider. These can add up quickly, and, since the bulk of these costs are traditionally shouldered by the seller, it can make a serious impact on how much you take home at the end of the sale.
Before selling a house, it’s best to know what expenses to expect so you can properly estimate your bottom line. For San Diego house buyers like us, we cover all closing costs associated with the sale of your home. We buy all of our houses as-is to make the process as easy as possible, and save you the hassle of preparing your home for a standard sale.
Here’s a breakdown of common seller costs when selling a house when going the traditional real estate market route.
Home Preparation Expenses
Unless you’re selling a home as-is to a trusted house buyer, you’ll have to plan on paying for some home improvements to make the property attractive to buyers. Common pre-listing expenses include general cleaning, repainting walls, repairing minor fixes, staging rooms, etc.
But depending on the condition of the home, these can also expand to major renovations related to roofing, plumbing, and landscaping. Home preparation costs can typically range between 1 to 3% of the list price.
Realtor Commission Fees
The majority of seller costs come in the form of realtor commission fees—that is, if the property is being sold through a traditional real estate transaction involving listing and buyer’s agents. These fees translate to 5 to 6% of the house’s final sale price and are generally split between the two agents.
Sellers can save on commission fees by listing the home as FSBO (for sale by owner) or using a discount broker. However, being able to negotiate a smaller commission fee with a full-service agent (or finding a realtor with an already low commission fee) can still be a cheaper option. Working with a house buyer directly lets you skip the real estate commission fees all together.
Both home sellers and buyers usually pay for closing costs; these are a variety of fees related to finalizing the transaction. Most of the responsibility falls on the buyer, but some closing costs are paid by the seller, such as:
- Title search – a fee paid for proof that the seller has a legal right to sell the home and that the title is free of any liens
- Title insurance – insurance that protects the buyer from any risks of defects in the title that may be undisclosed or unknown during the acquisition of the property
- Half of the escrow fees – a fee that compensates the escrow agent who coordinates the transfer of documents and payments related to the sale
- Outstanding balances – mortgage pay-offs, outstanding debts, etc.
- Taxes – these vary from city to city and state to state, depending on the location of the property, but might include property tax, transfer tax, and capital gains tax
Additionally, if the property is part of a homeowners association, sellers must pay other miscellaneous HOA costs as well. Added up, closing costs can set a seller back 1 to 3% of the profit.
Buyer Incentives And Negotiations
To make the sale more attractive, sellers often add buyer incentives like post-inspection repairs and home warranties to the deal. Some sellers even agree to pay for some of the buyer’s closing costs. This can take off 1% to 3% the seller’s profit, but it does make the home easier to sell. This can be used as leverage in a negotiation, especially if there’s a need to rush the transaction.
Moving fees or expenses that a seller must spend to leave the house being sold are often overlooked. Depending on the distance of the new home and the services hired for the move (e.g. packers and movers), these costs can take up to 1 to 2% of the profit.
Sellers might even have to factor in potential expenses associated with overlap periods or gaps between moving to a new home and closing on the old one, which may mean either spending for storage or temporary housing.
How To Save On Seller Costs
Selling a house can be stressful, but there are ways to make the transaction more hassle-free. Knowing the expenses and steps to sell a home is a good way to prepare yourself for the journey ahead.
But if you’d rather skip the pains of selling a home the standard way, there is a way to close on a deal fast with minimal effort or expense to you. Trusted House Buyers purchases homes as-is, leaving you with the most cash in your pocket at the end of the sale — without the need to pay for any closing costs as the seller.
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