Most of the homeowners are just focused on the amount of money that they would get after selling the house. They fail to plan for the costs that will come with selling the house. These fees may take up to 10 percent of the total selling price of the home. The good thing is that many of these costs are negotiable and can fluctuate as per the prevailing property market conditions. Here are some of the costs you may incur when selling your house.
The realtor’s commission is the highest fee that you will pay. Most realtors charge a commission of 5 to 6 percent of the total cost of sale. The commission is shared between your agent and the buyer’s agent. For example, if your house is sold at $500,000, the realtor's commission could be around $25,000 to $30,000.
You can skip this cost by selling the house yourself. However, you have to be prepared to take the roles of a realtor. The roles include hiring a contract lawyer, negotiating and overseeing the title transfer.
Cost of Repairs
If you would like to raise the value of your home and sell it for a higher price, you may be forced to do some repairs. You may be required to repair a faucet here or paint the living room. The cost depends on the extent of required repairs or expected value of the house.
Sometimes the repairs are asked by the buyer’s agent after the inspection. These costs are also dependent on the results of the house inspection by the buyer.
Buyers are more likely to buy a house if they get a picture of what it will look like with personal possessions in it. If your home is vacant or the items in it are outdated, you may consider hiring a staging professional. The stager will arrange furniture and accessories as per the kind of potential buyers you expect. This cost can run between $500 and $800.
This is a tax imposed upon the transfer of title from one entity to the other. You pay the tax where there is a legal requirement to register the transfer of the title. Not every city asses the transfer tax. On average, the transfer tax will cost you $750 or about 0.38 percent of the value of the house.
Closing costs are the second biggest cost behind the realtor’s commission. They account for about 2 percent of the selling price of your house. The buyer chooses the closing company, which in turn charges a fixed cost. The cost includes notary fees, mortgage processing fees and escrow fees among others.
In addition, you will be required to pay any outstanding property taxes, water and electricity bills, (can be shared depending on when you sell) and what remains of your mortgage repayment.
Factor in these costs when setting a price for your home. It is also good to hire an attorney to help you navigate some of the procedures to bring the costs down. Otherwise, you may earn very little from the sale of the house.