Selling a house is a big decision, and it can bring a lot of unexpected expenses. You might be ready to pack up and move on, but it's essential to understand what you're getting into before you do.
Many people are caught off guard by the expenses they encounter when they decide to sell their homes.
In this blog, we will shed some light on these surprise costs. We'll share some of the most common expenses hidden from view and discuss how to prepare for them.
So if you plan to sell your home soon, here are some of the costs that could sneak up on you.
1. Real Estate Commissions
As the name suggests, real estate commissions are professional service fees charged by real estate agents for their role in selling or purchasing a home. These fees are typically a percentage of the property's selling price, usually around 5% to 6%.
This commission is usually split between the buyer's and seller's agents as compensation for their services. It's crucial to remember that commissions can sometimes be negotiated.
The exact terms of an agent's commission can vary from sale to sale and depend on the region and which firm they work for – so, do your research first and then go with an agent.
2. Closing Costs
Closing costs are the various fees that home buyers and sellers incur to complete a real estate transaction – these costs can include loan origination fees, title search fees, appraisal fees, taxes, and more.
They typically range from 3% to 6% of the loan amount – for example, if you're taking out a mortgage worth $200,000, your closing costs could add $6,000 to $12,000 to your expenses.
These costs can vary based on the property's location and the escrow company used for the transaction. Sometimes, these costs can be negotiated between the buyer and the seller.
3. Home Prep and Staging
Home prep and staging are about making your home look its best for potential buyers. This could mean anything from fixing a leaky faucet to painting the walls a neutral color.
On the other hand, staging involves arranging furniture and decor to highlight your home's best features. Professional stagers might bring in their items or rearrange what you already have.
While these efforts can help your home sell faster and potentially for a higher price, they come with costs. Repairs, paint, and professional staging services can add up. But remember, a well-presented home can make a strong impression on buyers.
4. Professional Photography
Professional photography plays a critical role in real estate. A picture is often the first impression potential buyers have of a property.
High-quality, professional photos can showcase a property in its best light, highlighting its top features and highlighting its unique qualities.
They can significantly improve the appeal of a listing, attracting more potential buyers and even helping to sell the property faster. Professional photographers use different angles, lighting effects, and color tones to capture the perfect image.
They also use high-end equipment and have the expertise to make your property look its best. In today's digital age, where many buyers first browse properties online, high-quality images are crucial.
Even after you've accepted an offer on your house, it's important to remember that you're still responsible for the utilities until the sale closes. This means you'll need to budget for water, electricity, gas, and internet.
These costs can add up, especially if the closing process takes longer. It's essential to keep these services running smoothly to ensure a smooth transition for the new owners and to avoid any potential issues during the final walkthrough.
6. Moving Costs
Moving costs often get overlooked when selling a home, but they can be substantial.
Whether hiring a professional moving company or renting a truck and doing it yourself, there are costs associated with packing, loading, transporting, and unloading your belongings.
Plus, there may be additional expenses for packing materials or insurance. It's important to factor these costs into your budget early on to avoid any surprise expenses and ensure a smooth transition to your new home.
Landscaping is a crucial aspect of your home's curb appeal – it's often the first thing potential buyers see. A well-maintained yard can make a great first impression and increase your home's value.
This might involve regular lawn maintenance, planting flowers, trimming hedges, or hiring a professional landscaper.
While it requires time and money, a beautiful yard can help attract more buyers, possibly leading to a quicker sale and a better selling price.
After a home inspection, buyers often request repairs for uncovered issues. These could be anything from minor fixes like a leaky faucet to significant concerns like a faulty roof.
While you can negotiate these requests, agreeing to make repairs can help ensure the sale moves forward.
However, this does mean additional costs for you. It's important to anticipate potential repair costs when listing your home and be prepared to negotiate these with the buyer.
9. Legal Fees
Navigating the legal aspects of selling a home can be complex. You might need a lawyer to help with the transaction in some locations. They ensure all documentation is correctly filled out and filed, protecting your interests throughout the sale.
This service is crucial, but it does come with fees. These costs vary depending on your location and the complexity of the sale, so it's important to factor them into your budget when planning to sell your home.
10. Capital Gains Tax
If your home's value has significantly increased since you bought it, you may owe capital gains tax. This is a tax on the profit from selling an asset like a house. The tax rate varies based on your income and how long you've owned the home.
This rule has some exclusions, so it's worth consulting with a tax professional to understand potential liabilities. Remember, understanding your financial obligations upfront can help avoid surprises down the line.
Costs of Selling
So there you have it – these are the top 10 costs to consider when selling your home. While the process can be expensive, understanding potential expenses ahead of time can help you stay on budget and make the most out of your sale. Do your research and hire a professional to help you navigate the process, and you'll be on your way to a successful sale. Good luck!
12 Ways to Invest That Don’t Involve The Stock Market
If you believe the stock market is overrated, you are not alone. Many people believe that sometimes the stock market can be incredibly volatile – which is not a bad claim regarding the nature of the stock market. This is because many people seek different types of investments that don't involve the stock market. These investments might not be as rewarding as the stock market, but they are safer and more reliable.
The 10 Genius Ways Warren Buffett Teaches Us How to Save and Invest
Not many people in the world don't know who Warren Buffet is – almost everyone has heard of him. He is not only a legendary investor but also an inspiration to many. He has made many wise investment decisions that have turned him into one of the wealthiest people in the world.
7 Safe ETFs to Shield Your Portfolio in Market Downturn
Market downturns come and go, but being ready with your portfolio is essential. Most people do not have the time or want to study individual stocks that can create a portfolio, so they go with a more straightforward route, the ETF. An Exchange Traded Fund, ETF, combines different stocks that can be sold on the market.
11 Easy Ways to Make Money While You Sleep
Making money while you sleep is a dream for many people. It is as easy as starting to putting in the work. It takes a lot of action to get started, but when you can sleep and make money simultaneously, you will be on the right track to financial freedom.
I’m Steve. I’m an English Teacher, traveler, and an avid outdoorsman. If you’d like to comment, ask a question, or simply say hi, leave me a message here, on Twitter (@thefrugalexpat1). Many of my posts have been written to help those in their journey to financial independence. I am on my journey, and as I learn more I hope to share more. And as always, thanks for reading The Frugal Expat.