Costs of Selling your Home

When you’re selling your home, most of your attention is probably going to be focused on profit. And that makes sense, because buying a home and paying a mortgage are costly, and you want to get as much of a return on that investment as possible when you plan to sell your home.

Often, you’re also having to consider getting the money that you need to buy your next home. But keep in mind that the difference between what you paid for your home and what the next person pays for it isn’t necessarily all going into your pocket, as there are quite a few big costs of selling a home that will cut your profit.

As a rule of thumb, you can expect that around 10% of the money you earn from the sale of your home is going to be lost to things like real estate commission fees and inspection fees. And the costs of selling a home are likely going to be even higher than that if you need to put in repairs or upgrades prior to having it listed.

While it isn’t cheap to sell, you still have a lot of profit to gain. You just have to make sure that you go into the process with a clear idea of the costs of selling a home so that you’re not hit with a surprise later on when your end balance isn’t as high as what you are expecting.

Here are seven costs that you need to know of selling a home as you go into the sale process.

1. Pre-Sale Repairs

   There are a few ways to go about repairs when you’re selling your home:

   • • Fix Everything
     • Fix just the big stuff
     • Fix just the obvious stuff
     • Fix just the stuff that your future buyer wants fixed after their home inspection
   •  

   Which route you take is largely going to depend on the current condition of your home. While it is possible to sell a home that needs major repairs, your options are limited and the money you save in repair costs will almost certainly come out of the purchase price.

   Most homes, however, probably don’t need extensive work to get to a point where they’re attractive to buyers. In that case, you have quite a bit of wiggle room in terms of how you approach repairs. If the house needs a new roof or furnace, you’d be wise to spring for it. Anything that you anticipate coming up in the home inspection you may as well take care of it before going to market. But if you just want some quick fixes to make your home look more appealing, focus on the home improvements that help your home look its best. These include landscaping and other front-facing exterior fixes, paint touch-ups, and cabinet repairs.

    

2. Pre-Sale Decorating and Staging

   The changes you make in terms of decorating and staging your home can be just as important (and sometimes even more so!) than repairs. First impressions count for a lot when you’re selling a home, and a cluttered, outdated, or poorly decorated home is going to turn off a lot of buyers before they even get a foot in the door. Add to that the fact that staged homes sell 88% faster and for 20% more profit than non-staged homes. So now you can see the value in making sure your home is in tip-top design shape before it’s listed.

   Some of the things you’ll do to optimize your home’s appearance are free, or even potentially profitable, but some of it—like new paint, new carpeting, a storage unit for all that extra furniture, and professional home staging—will set you back a bit. In terms of home staging, if you bring in a pro to do it then you’ll probably be spending about $200 to $600 for the initial consultation, plus around $1,900 for the staging itself. Add another $140 to $180 to that if your home is also in need of a professional deep cleaning.

3. Pre-Sale Home Inspection

   A pre-sale home inspection is one of the more optional costs of selling a home, but it could save you money in the long run if you get on top of the repairs that will allow you to ask for a higher sale price.

   The biggest things you want to have addressed in a pre-sale home inspection are things that may be difficult to identify on your own, like structural damage and pest and termite damage. These “below the hood” problems are not ones that you want to be surprised with when you’re further along in the sale process, and they could prevent you from selling in the first place.

   Again, this is an optional cost. But if you’ve lived in your home for a long time or your home is old, it’s definitely one to consider.

4. Home Equity Loan Payback

   If you took out a home equity loan, during your residency, then you’re going to have to pay it back before you can sell.

   It is a great option for getting the funding that you need for big expenses like home renovations, and while they do come with a 20 year payback period, that assumes you’re in the home for all that time. When you sell, the credit line closes and you’ll have to even up. That’s because home equity lines of credit operate as lien against your property. If you don’t own the property anymore, the lien doesn’t exist. And naturally, that necessitates paying off the loan before that point.

   If you took out a home equity loan, check with your lender to see what your payoff balance is.

5. Title Insurance Policy

   This might not be something that you have to worry about, but if you have any concerns over the ownership of your property then it is probably going to be a smart idea to get a title insurance policy, which protects you in the event of a title dispute on the property. Sometimes this is paid for by the buyer, but not always.

   All home sales require proof of title before they can close. This verifies ownership and grants the seller the right to profit from the sale—and to sell the property in the first place. If you get to the closing however and your title is disputed, you could end up facing a lawsuit. A title insurance policy protects you in this event, saving you on the associated costs of a suit.

6. Real Estate Commission Fees

   Real estate agents get paid through commission fees. Instead of invoicing you a flat fee for their services, agents will get a set percentage of the sale price—generally 5% to 6% of the sale price. That’s $15,000 to $18,0000 in commission fees on a home that sells for $300,000. This commission fee is split between your agent and the buyer’s agent, and is paid at your closing.

7. Other Closing Costs

   Finally, you’ll need to account for the remainder of your closing costs. Buyers usually take on the brunt of closing cost expenses, but if you’re selling in a strong buyer’s market you may have to negotiate to pay more than the normal share.

   It’s hard to know exactly what closing costs you’ll face as a seller, but they’ll probably include recording fees and a property or deed transfer tax, in addition to the aforementioned real estate agent commission fee. All together, these usually come out to around 8% to 10% of what you make in the sale.

The exact costs of selling a home vary widely from seller to seller, since repair needs, staging needs, and sale prices vary widely as well. When you first meet with your realtor, be sure to ask all of the questions that you need to know regarding costs, including what sorts of improvements they recommend and what their commission is. This will help you better anticipate what your final profit will be.

Planning to sell your home soon?

If you’re planning of selling your home in darien connecticut area and need some help, we’re here for you.

Ruspini Realty is committed to assisting a diverse group of people in a wide range of house values from the starter home to the prestigious property. We list, market and sell homes fast for the benefit of both buyers and sellers alike.