Are you excited about the prospects of selling your house and can’t wait to have your pockets full of dollars?
Don’t get carried away, yet. There are a number of unanticipated costs that largely determine the final figure. These costs are very often overlooked by many homeowners. Here are some surprising costs that are worth learning to avoid getting a rude shock later.
- Realtor Commissions
On a typical basis, realtors charge 3% commissions on each side of the transaction. The seller’s agent will often charge between 3%-8% to list the home and the buyer’s agent will often charge around 3%-5% when the house sells. There is sometimes room for negotiation. However, in general this means that if your house sells for $500,000, you won’t be getting $500,000 at closing. Instead, using a 6% total commission cost average, you would be getting around $470,000 – and this is before closing costs, concessions, and repairs.
If you are selling your home it’s important to run the numbers and know how much you are likely to walk away with after all is said and done.
- Renovations and Repairs
Fresh paint, detailing carpets by steam cleaning, installing a new water heater, updating the landscaping, or repairing a damaged roof can enhance your home’s appeal but these costs can add up when selling your home. Come up with a budget for hiring professionals before undertaking renovation exercises.
When you deal with repair issues early on, you increase curb appeal and the probability of doing well in a home inspection run. However, sometimes the costs of repairing your home before its sale is too cumbersome.
Another option is to consider selling your house as-is. This allows the buyer to do the repairs while you save money and time.
It is wise to let the utilities run until the closing day. It will enable your agent to show that they function fully. It may also prevent minor issues such as mold growth. A running A/C helps cool down the house during summer and brings the humidity level to less than 70 percent. This prevents mold from growing.
However, the longer your house takes to sell, the higher the utility bills. These can be especially costly if the house has a large square footage, more than one air conditioning unit, or a large pool.
- Offering Seller Credits
If you are unwilling to deal with renovations and repairs, you could offer a seller credit to offset the cost of restoring the property. Lenders place a cap on the maximum credit that can be put in place. Typically, it ranges between 3 and 6 percent. Most buyers will request one, and it is prudent to budget for a range in which you will be most comfortable.
- Digital Staging Costs
The best way to increase the exposure of your house to ready buyers is by staging it on online markets (such as Zillow, Realtor, or Redfin). You will want the advertisement to be accompanied by attractive photos, descriptions, videos, and a virtual tour. Of course, each of these services will cost extra when listing your home.
If your agent chooses to subcontract the staging services, you might end up spending upwards of $1800 to $5000 or more.
- Capital gains tax
Certain circumstances call upon you to share the profit with the IRS. You might have to pay a tax on the profit you get from selling the house.
If you are a married couple, you can qualify for exemptions that don’t exceed $500,000 in value. It is wise to refer to an accountant or CPA for comprehensive rules on capital gains tax.
- Title Insurance
This cost covers lenders and property owners against damage arising from flaws in the title (such as liens or unexpected title issues). The insurance coverage is paid for by the buyer but may also involve the seller if state laws require it.
- Moving costs
Naturally, you’ll need to relocate your personal belongings to your new house. Moving costs increase with the distance and amount of property to relocate. Moving companies can often charge from around $1,000-$5000 (or more) to safely move your belongings.
It is wise to hire professional movers who can help get you to your new place in a timely manner but just make sure to count this cost into your selling budget.
If you are considering selling your home contact us first to see what we can do for you!