How Much Does It Cost to Sell a House?
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If you're selling a home, you'll want to know how much it's going to cost you to close the deal. That way you can make a plan for buying your next house.
In addition to what's needed to pay off your mortgage, it’s smart to plan to spend about 10% of the home price in selling costs. But some things are optional.
Cost of selling a house: Most common expenses
Here are some of the typical expenses you can expect to pay when selling a house.
Real estate agent commissions
The seller’s agent usually charges 5% to 6% of the home purchase price when the deal closes. This is likely the biggest expense you’ll pay, so when shopping for an agent, ask specifically about the commission fee. Some agents are willing to negotiate their rates. Make sure you agree on commission terms in writing.
Seller’s agents usually split commissions with buyer’s agents, who generally don’t charge their clients.
Taxes and neighborhood fees
You’ll owe a prorated share of property taxes when you sell your home. The amount could be close to zero if you’ve recently paid taxes, or several thousand dollars if the due date is around the corner.
In some states, you may also be charged a local transfer tax, which the seller pays in order to change the title from one person to another. Depending on location, the tax is generally 0.01% to 2% of the sales price. You may also face capital gains taxes if the profit you make from selling your home is more than $250,000 ($500,000 for married couples on joint tax returns).
“Common costs include agent commissions, taxes, title insurance, moving and your mortgage.”
If your neighborhood has a homeowners association, expect to pay prorated membership fees. You or the buyer may also need to pay an HOA transfer fee.
Title insurance for the buyer
This protects the buyer in case there’s an issue with the home’s ownership history.
Buyers also purchase a title policy if they apply for a mortgage, but that policy protects only the lender. In some areas, the seller pays for a separate policy for the new homeowner. The average cost is about $1,000, according to the National Association of Realtors.
The title company will run a title search on the property during the sale process. If a lien on your home is revealed, you’ll also need to settle it before you can sell the house.
Your current mortgage payoff
It’s no surprise you’ll need to pay off your mortgage when you sell your home. But the payoff amount is probably different from the balance due listed on your last mortgage statement, because of interest charges. You’ll want to know the payoff amount. If your mortgage has a prepayment penalty, that will be added to the amount due.
The buyer will probably order a home inspection before closing. If the report reveals problems, you may be asked to pay for repairs.
Whether you buy boxes, pack and move them yourself or hire a company, you’ll want to budget money for the actual move.
Optional costs to sell a house
Depending on how competitive your local market is, it can be smart to pay for extra services to attract potential buyers. They’re not always necessary, but in a sluggish market they could help your home stand out.
To ease potential worries about buying an older home, sellers can offer a home warranty that would cover most of the repair costs if a major system broke soon after the home was sold. A one-year warranty costs $350 to $600, on average, according to ImproveNet, an online marketplace for finding home improvement contractors.
It’s wise to remove clutter and give your home a good cleaning before you put it on the market. But your agent may suggest going a step further and hiring a home stager to make your home more visually appealing.
Stagers may rearrange furniture, change the interior design and even rent furniture to display while your house is for sale. The typical cost ranges from about $500 to $2,000, according to HomeAdvisor.
Portion of buyer’s closing costs
Buyers are usually responsible for mortgage fees, home inspections and appraisal expenses, which can add up to about 2% to 5% of the selling price. If you’re in a slow market, offering to pay some of those closing costs for the buyer could help seal the deal.