The cost of selling a house depends on the sale type and price. For Sale by Owner (FSBO) and cash sales through a cash buyer are cheaper than selling through a real estate agent. Typically, the real estate agent commission is the highest cost when selling a house.
Therefore, if you opt for a sale process that does not involve one, you can save significantly. Some of the costs are mandatory, like the taxes and closing costs, while others are optional, like the costs concerning the staging, inspection, sell house as-is, etc.
Below is a look at the various costs involved when selling a house at different stages.
During the pre-listing phase, you need to stage the house, have the house appraised to determine its market value, undertake repairs and maintenance—if necessary, or renovate and upgrade the property to improve its value.
You may also need to hire a cleaner for deep cleaning and pay for a storage unit to put away some or all of your items. All these activities have a cost. Below is a breakdown of each of the pre-listing costs.
Although it is not mandatory to conduct a home inspection when selling your house, it is crucial for uncovering any issues that may require repair, lower the value of your home, or that you would need to disclose to a potential buyer.
Home inspection fees vary from location to location and depending on the size of the home ranging from $200 to $700.
According to a Real Estate Staging Association research, in 2021, staged homes sold approximately nine days faster and at $40,000 more than the listing price. According to the association, it costs $642-$2,745 to stage a home for sale.
However, the cost can be higher if you are renting furniture and décor. It could also be higher if you hire a professional stager or interior designer to set up the house for sale.
Cleaning and decluttering are crucial aspects of staging a home. If you choose to do it yourself, there will be no associated cost. However, hiring a professional cleaner can cost between $100-$500 for deep cleaning and decluttering.
If the home report from the inspection reveals some issues that may need repairs, you can decide to do the repairs or sell the house as is but sell the house at a lower price to enable buyers to meet the cost of repairs.
The cost of repairs can range from a few bucks up to thousands of dollars, depending on what is being repaired and the extent. For instance, a repair to fix a broken faucet will cost less than $100. Conversely, repairing or replacing the roof can cost up to $10,000.
Some people opt to undertake home improvements before selling a house to boost its value. The most common ones include repainting, replacing exterior doors, upgrading the kitchen, remodeling the bathroom, updating the interior design, etc.
Home renovations can cost from $1000 to $200,000 or more. Note that some home improvements do not have a significant ROI, and it would be better to sell the house as is.
If you will not be living in the house during the sale period, taking home insurance against burglary is important. In most cases, your regular home insurance will not cover the house if it is vacant. Consult your insurance provider about a suitable and affordable cover for the house’s sale period.
Throughout the sale period of the house, you must keep up with utility bills such as water, electricity, landscaping, and air conditioning, among others.
An appraisal is essential for determining the fair market value of the house. According to HomeAdvisor, appraisal costs typically range between $313 and $420. However, it can vary from location to location and depending on the size and condition of the house.
According to a Zillow report, most home buyers say that they find real estate photos of the house useful in determining whether to buy the house. Standard real estate photos cost $150-$500.
These are costs associated with listing your house with a local multiple listing service. You may also print flyers, signs, and open house essentials.
Some sellers also run social media ads to reach more potential buyers. The budget can range from $100 to $1000 or more.
Although some closing costs are specific to the buyers, others are met by the seller. Generally, seller closing costs take up 8-10% of the house’s sale price.
Real estate agents take the largest portion; the rest goes to mandatory and optional seller fees. Below is a look at typical closing costs.
In most cases, real estate agents do not charge a flat fee to help you sell your house. Instead, they charge a real estate commission—usually 5%-6% of the house’s sale price.
Aside from paying for their expertise, the commission covers listing costs on multiple listings services, brokerage fees, photography, home staging, and marketing and advertising.
The following taxes may apply as part of your closing costs:
In most states, home sellers are required to pay for title insurance. The insurance covers lenders and homebuyers against any financial losses resulting from property title issues. It costs 0.5%-1% of the property’s sale price.
As part of their strategy to get an offer and close fast, some home sellers and listing agents offer buyers discounts or trade-offs. The most common ones include home warranty, post-inspection repairs, credit of closing costs, etc. However, if you are selling in a sellers’ market, you may not need to offer these concessions.
In some states, an attorney must oversee the closing of real estate sales regardless of whether a real estate agent was involved or not. In which case, the seller pays for the legal fees.
Other costs incurred at the closing include moving costs and any amount owed to creditors, e.g., back tax, pending mortgage fees, HOA fees, escrow fees, notary fees, and outstanding loans secured by the house.
When selling a house, you must consider the costs involved to avoid selling at a loss. Classify the costs into mandatory and optional ones. Find the estimates for your anticipated costs and determine how much they will take up your proceeds.
Then, assess ways to minimize the costs, either by doing some of the tasks yourself or doing away with them, seeking tax exclusion and closing payment assistance or negotiating with service providers.
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