The Real Cost of Selling Your Home
A Guide to Selling Your Home: Budgeting for the Process
Selling a home can involve a variety of expenses, and while some may apply to you, others may not. The total costs will depend on factors like the age and price of your home, whether you choose to do things yourself or hire professionals, the market conditions, and more. If you'd like specific estimates tailored to your situation, feel free to reach out to us at the end of this guide. We’re happy to help you understand these costs and assist you in selling your home for the best possible price.
Pre-Listing Costs: Expenses Before You List Your Home
Did you know some of the costs you'll incur as a seller happen even before you officially list your home? Here are a few things you might need to spend on to make sure your home is ready to sell at top dollar.
1. Cleaning
First impressions count, and you’ll want your home to shine! You can either hire a professional cleaning service or handle it yourself—either way, don’t forget to factor this into your budget.
2. Landscaping
Curb appeal is crucial for attracting buyers. Consider spending time and money on improving the exterior of your home. This could involve tasks like painting the front door, planting flowers, trimming trees, or replenishing mulch or rocks.
3. Repairs & Maintenance
To ensure your home looks well-maintained and appealing, address any overdue repairs before listing. Whether small fixes or larger projects, make sure everything is in working order to help make your home more attractive to potential buyers.
4. Improvements & Upgrades
Depending on your property and the market, making some upgrades might increase your home's value. However, not all improvements offer a good return on investment (ROI). Before proceeding with any renovations, consult with a real estate professional to ensure you’re making cost-effective changes that will add more value than they cost.
5. Staging
According to the National Association of REALTORS®, staging a home can increase its value by 6-10%. Whether your home would benefit from staging depends on various factors. Much like upgrades, it’s wise to discuss this with your agent first. Staging doesn't always need to be expensive—you may be able to use existing furniture and décor.
During the Sale: Expenses After You Go Under Contract
Once you’ve accepted an offer and are under contract, there are several additional costs you may encounter. Here’s what to keep in mind:
1. Repairs
Even if you’ve budgeted for repairs before listing, it’s possible the buyer’s inspection will uncover more issues. Your real estate agent can help you understand what repairs are common in your area, and whether you’ll need to address anything before closing.
2. Commissions
Typically, as the seller, you’ll be responsible for paying the commissions to both your agent and the buyer’s agent. Real estate agents set their own commission rates, so be sure to understand what this fee will be and what it covers before you agree.
3. Seller Concessions
Seller concessions are costs that the seller agrees to cover for the buyer, such as a home warranty or termite bond. These may be more common in a buyer’s market, where there are more homes for sale than buyers. In a seller’s market, concessions are less likely to be necessary.
4. Closing Costs
These fees can include title, escrow, or legal fees, depending on your market. As the seller, you’ll likely need to budget for prorated property taxes and any HOA fees due at closing.
5. Home Warranty
In some situations, the buyer may request that you provide a home warranty. This policy protects the buyer from large repair expenses if major systems or appliances fail after the sale.
6. Moving Costs
Moving expenses are often overlooked! Be sure to budget for packing materials, moving trucks, storage rentals, and professional movers if needed. And don’t forget to factor in a little extra for a thank-you gesture, like pizza and drinks for family and friends who help.
7. Temporary Accommodation
If you need somewhere to stay between selling your current home and buying your next one, you’ll need to budget for rent, deposits, utilities, and any other living expenses. If you close on your new home before selling your current one, you’ll also need to account for maintaining both properties during this overlap.
8. HOA Fees
If you live in a community with an HOA or other governing body, you may have fees related to selling your home. These could include capital improvement fees, disclosure fees, or document preparation fees. Be sure to account for these costs, as well as any outstanding fines.
9. Mortgage Expenses
Before closing, review your mortgage documents carefully. Some lenders may charge fees for paying off your mortgage early or other processing fees. Be sure to add these potential costs to your budget. Also, remember that you’ll be responsible for paying your mortgage, property taxes, utilities, and HOA fees through the day of closing.
How Much Should You Budget?
As mentioned earlier, the costs involved in selling a home vary depending on numerous factors. If you'd like more specific estimates for your situation, please get in touch. We can provide a custom net sheet that breaks down exactly what you can expect to net from the sale of your home under different scenarios.
In general, it’s a good idea to budget around 7 to 8% of your home’s sale price for expenses. If you end up spending less, that’s a pleasant surprise, and you can use the extra funds toward your next home purchase.