After a significant boom in the housing market, home sales are falling, reported Reuters recently. While prices continue to soar, the market has slid somewhat.
However, with the average price of a home breaking the $400,000 barrier for the first time, many sellers are hoping to realize a large profit when they sell. Yet, despite bigger returns on their investment, selling a home can still be a costly business.
There are several fees, commissions, and charges that are associated with selling a house. True, some methods will avoid some of these costs, but by and large, most sellers will incur some hefty fees once they complete a sale.
What is the most inexpensive way to sell a home?
If you are scanning this article it could be assumed that you are interested in selling some residential property. It might also be assumed that you would like to know how much it will all cost you, and if there is a cheaper route you can take.
There are many cash-for-home buyers such as https://sellyourhousefast.com/ who offer fast sales with no fees. These businesses very often cover all the fees including the closing costs.
Selling a house by yourself could also be a way to avoid the realtor commission which can be considerable. Auctions are another way to avoid these particular fees although there will be charges due to the auctioneers.
The cheapest way is through a cash-for-property firm as no renovations are needed, nor are fees added on. However, this may result in a lower offer being made.
How much will you pay to sell your home?
This will depend on the method, but for argument’s sake, it can be assumed that you will use a realtor. Using other sales methods can mean avoiding some of these fees, but most people go down the route of a realtor.
If you used some of the many tips for investing in real estate you could be sitting on a property worth substantially more than your initial investment right now. If you are contemplating selling it, you should read on to discover what all the costs are and for what areas.
Below are some of the fees that cannot be avoided if you are using a realtor, plus a few more that you may not have considered, or budgeted for.
Real estate attorney fees
Law Guideline states that while the fees for a real estate attorney can vary, you should factor in around $2,500 to $3,000 for this part of the sale.
Hiring an attorney is a necessary part of a house sale and is one corner that cannot be cut unless you are qualified to handle the legal documents yourself.
This is the biggest fee attached to selling a house. Although there can be variations in the percentage that different realtors charge, the average is around 5% to 6%.
This doesn’t sound so big until you do the calculations on your asking price. If you have one of the homes that are now worth $400,000 then a 6% commission on it will be $24,000. That’s a sizable chunk out of your property’s value.
Are there any extra costs that you haven’t considered?
It has been said that you should expect to spend around 10% of the value of your home on all the costs incurred by selling it. That is because there are often more expenses than people at first factor in.
Carrying out a seller’s inspection is a good tip when selling a house, but it is an additional cost. Expect to pay up to $700. The true cost will depend on your region and how big your property is.
Renovations and repairs
There may be some repairs that cannot be avoided. There may also be areas of the home that need some updating, and this can often lead to a faster sale. However, it is another expense.
There is no clear answer to how much this will cost as it will depend on what renovations you carry out. Some new additions to a home can add value so they may be worth considering, but others may be unnecessary. A seller’s inspection will help to highlight problem areas before buyers discover them.
Staging a home
One popular trick for speeding up the sale of a home is to stage it. If you decide you wish to follow this trend, be prepared to find another $2,000 to $3,000.
A realtor will take photographs for their marketing, but if you are planning to sell the home yourself you will need a photographer. You may also wish to carry out some additional marketing yourself or have more control over it. If so then you will be paying an extra $100 to $300 approximately.
Additional closing costs
Once the sale has been finalized you will have to pay your attorney as mentioned above, but you will have to find some funds for additional costs. These include taxes including a transfer tax, closing agent fees, and recording fees.
Your mortgage may have penalties attached for early repayment, and this will eat up more of the income from the house sale.
Did you agree to any buyer concessions to speed up the house sale? Then you will be covering some of the buyer’s costs too.
Don’t forget, when you sell your home you will need to relocate. This can be another sizable amount to factor in. You could be paying out another $1,000 here.
If you choose to sell your home by yourself (FSBO or for sale by owner) then you need to sound like a professional realtor. You can cut some of the fees this way but you will still end up paying out thousands of dollars on different aspects of the sale.
The only way to completely avoid the majority of the costs above is to sell to a property investment company that specializes in cash purchases. This isn’t for everyone though, so careful calculations need to be done to avoid hidden fees and shocks.
As a ballpark figure, you could expect to spend 10% of what you sell your home for on all these costs. However, it could be even higher depending on where you live, the size of your home, and the concessions you make for a quick sale.