Explore the associated costs with selling a house.
Whether you're retiring, relocating for work, downsizing, or upgrading, selling a house can be a complicated process with a surprising price tag. If you’re a first-time home seller or haven’t sold a home in years, here are some costs to consider before listing your property.
Agent’s Fees
Most sellers work with a real estate agent to list their home. Both the seller’s and buyer’s agents typically receive a commission once the sale goes through. These fees are generally calculated as a percentage of the sales price, which means the higher the sale price, the larger the commission.
“The real estate commission is usually the biggest fee a seller pays – 5 percent to 6 percent of the sale price,” says Jeanne Lee, a writer for Bankrate.com. For example, if you sell your house for $250,000, you could be looking at $15,000 in commission fees.
Neighborhood Debts
Even after you’ve moved out, you may still owe certain neighborhood-related costs. These might include prorated property taxes, which could range from a minimal amount to several thousand dollars, depending on when the taxes are due, according to Margarette Burnette and Barbara Marquand of NerdWallet.com. If your home is part of a Homeowner’s Association (HOA), you’ll also need to pay any outstanding HOA fees. Your state might also require you to pay a local transfer tax.
Paying Off Your Mortgage
The amount you make from selling your house doesn’t always translate into the full amount you take to your next home, especially if you still owe on your mortgage. You’ll need to satisfy that debt first, using proceeds from the sale.
“For the sale to close, you’ll need a payoff letter from your lender that details how much you owe, including any fees or prepayment penalties,” explains Greg Daugherty of Investopedia.com.
Home Repairs and Staging
To maximize your home’s value, you might want to invest in repairs or cosmetic upgrades. This could mean anything from landscaping and roof repairs to fixing plumbing or simply painting the walls. Buyers may also negotiate the cost of any repairs discovered during a home inspection.
Staging your home to make it appealing to potential buyers can also be a worthwhile investment. According to HomeAdvisor.com, the national average cost for staging a home is about $1,587, with full furniture rentals running up to $6,000 or more.
Additional Closing Costs
As the seller, you’ll also be responsible for additional closing costs beyond the real estate commissions. In a competitive market, you may even be expected to help cover some of the buyer’s costs. Some common seller expenses include property taxes, attorney fees, title insurance, escrow account fees, and courier charges.
Relocation Costs
Selling your home is just the first part of the process – moving to a new place comes with its own set of costs. Whether you’re relocating across town or to another state, moving expenses can quickly add up. These may include hiring professional movers, renting a truck, purchasing packing materials, and, if necessary, traveling for the move. If you're moving long-distance, you may also face temporary housing costs and storage fees for your belongings.
If you need to vacate your home before the sale is finalized, you may need to arrange for temporary accommodations, which could involve renting an apartment, staying in a hotel, or finding other short-term housing.
Planning Ahead with Five Star Bank
Understanding all the costs involved in selling and relocating is essential for budgeting effectively and avoiding any financial surprises. Planning ahead can help you navigate this process with confidence.
At Five Star Bank, we can help you prepare for the financial aspect of moving, whether it’s saving for your next home or getting advice on how to handle the costs of selling your current one – reach out to us today.
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