When you’re ready to sell your house, you may be wondering about the costs of selling a home. While some costs are standard fees paid by most sellers, others can vary depending on your unique situation.
On average, you can expect about 10% of your home’s sales price to go to closing costs. If you're selling your house for a nice profit, this can help soften the blow a bit.
Some costs can include fees to realtors and mortgages and other fees may be for home repairs and sprucing up your house to the market.
This guide will go over some of the most common closing costs for sellers so you can be prepared at closing time.
Commission Fees
One of the biggest fees you’ll pay when selling a home is the realtor commissions. Typically, this is 5%-6% of your sales price. Let’s say you sell your house for $250,000. You will need to pay your realtor $15,000 in real estate commission.
When you pay a commission at closing, it is typically split between your realtor and the buyer's realtor. According to a recent report from the National Association of Realtors, the sellers pay these fees in 77% of home sales.
If you’re hoping to save some money here, you may be asking yourself, how much does it cost to sell a house by owner? Even if you opt to sell your home yourself, you may still need to pay to list your home.
You may also be able to save money by negotiating a lower commission fee. If your home is likely to sell quickly, or if it is located in a strong market with a high sales price, your realtor may also be more willing to lower their commissions.
Home Repairs
Home repairs aren’t something that every seller needs to pay for but in most cases, you should prepare to pay for some. Home repairs might end up being required in order to close, or there may be others you want to make before you even list your home.
An inspection can result in a few small problems that need to be fixed in order to close. These can be negotiated between the buyer and seller to reach an agreement as to which ones will be paid for by the seller.
There are some home repairs you may need to make before you put your house on the market to help it sell quicker. These home repairs can include fixing a leaky sink, painting it a neutral color, or replacing old appliances.
If you can spend a little money on some quick home repairs, you’ll often recoup that money back, plus more at closing time. These can increase the value of your home and actually make you more money in the end.
If your home needs almost everything, it may be in your best interest to do an as-is closing to save you money. When you sell your home as-is, you typically waive the inspection, or you aren’t responsible for anything that comes up in it.
You’ll need to budget a little money here depending on how many repairs your home needs.
Home Staging
Home staging is a great tool to help you sell your home. While it will cost you a little money, you’ll often recoup this money by making your home sell for a higher price.
Home staging is where you rent, buy, or use existing furniture to re-design a space and show buyers its potential. Maybe you have a couple of extra rooms in your house that are empty. You can stage them as spare bedrooms or kid's rooms to show buyers how versatile your home is.
Virtual home staging is another option available today using new technologies. Designers can virtually stage your home by placing furniture and accessories in the images of the rooms of your home. Almost anything is possible with today’s technology paired with the creativity of talented designers who know how to use it. This is a much less expensive and more convenient option than traditional home staging. Companies like Hommati offer this service at very reasonable prices.
If you have already moved out of your home and it is sitting empty, a home staging can help show buyers how the home could look if they lived there. They can easily visualize themselves in the home and it will feel more like a comfortable livable place. This is also a great time to have virtual staging done. The rooms can virtually be filled with updated furniture, accessories and art making your home a showplace for online viewing.
If money is an issue, you can often purge a lot of your clutter and move things around in your own home to make it look fresher and help it sell.
Your costs for home staging are completely optional but it is something that will help your house sell faster and typically for more money.
Mortgage Payoff
When you sell your home, you will need to pay off the mortgage if you have one. Your mortgage payoff statement is usually for a lower balance than you actually owe.
In some cases, you will need to pay the prorated interest that you have accrued to your total balance at closing.
There may also be some fees involved in paying your mortgage off early. You can check with your mortgage provider or lender to see if there are any penalty charges.
Your mortgage payoff will usually be a pretty straightforward process taken care of at closing by the title company. You will get an estimate of these costs before your closing.
Utilities
If you’re selling your home after you have already moved out, make sure you budget some money for utilities. Just because you move out, it doesn’t mean the gas and electric bill don’t need to be paid.
Make sure to keep paying your gas, electric, water bill, and any other association dues until you officially close on your home.
These are considered carrying costs and you’ll want to have money set aside for these costs in the event that you need to carry your home for longer than it takes to buy your new home.
You should also keep in mind that you'll be paying these in addition to any utilities in your new home. Remember to cancel the internet, cable, and phone lines to the home to avoid paying for these while your house is vacant.
Capital Gains Taxes
When you sell your home, don’t forget to consider the taxes that will need to be paid. If your house sells for more than you initially paid for it, you may need to pay capital gains taxes on it. The sale of your home will need to be included in your tax returns.
Luckily, most homeowners are able to exclude $250,000 of sales profits for a single filer and $500,000 for a married couple who file jointly. You are able to use this exemption as long as you haven’t used another one in the past two years.
There is an eligibility test you can take online through the IRS website that can help you see if you are eligible for a tax break.
The tax break also only applies if the home you’re selling was your primary residence for at least two years over the past five.
Property Taxes
You should also include property taxes in your figures. While property taxes are typically paid in advance, you may have to pay a prorated share up until closing. This share of the property taxes is then placed in escrow.
If you paid your taxes ahead of time through your mortgage company, you may actually see a refund at closing. In this case, the buyer will reimburse you at the closing.
Closing Costs
The buyer is usually responsible for a good portion of closing costs. If you’re selling a home however, that is in a buyer’s market, you should budget to cover some of these.
In a buyer’s market, there are a lot of homes for sale and offering to pay for closing costs may help your home stand out.
Typical closing costs include association fees, attorney fees, taxes, title insurance, and transfer taxes. There could also be brokerage fees and courier fees that you may be asked to cover.
You can usually estimate anywhere from two to four percent of the sales price of your home to go to closing fees. This may be a little less if you aren't paying off a mortgage or if the buyers are covering any costs.
Your Costs of Selling a Home
Your actual costs of selling a home will vary depending on your unique situation. You can usually figure around 10% of the sales price of your home as a ballpark figure.
If you plan on doing some home repairs and staging, this cost of selling a house will, of course, be more but hopefully you can recoup some of your investments by selling your home for more.
If you’re in a buyer’s market, some of these home improvements can help your home stand out and make it sell for more money. The faster you sell your home, the less you will have to pay in carrying costs as well.
Seller closing costs are unavoidable, but it is a great feeling to sell a home you’re proud of and move on to a new chapter of your life.
If you’re ready to get the home selling process started, enter some quick information to find an agent here. A professional can help sell your home quickly and keep your closing costs to a minimum.