As you prepare to list your property, understanding the most common expenses when selling a house—optional costs and standard home seller concessions—can help you budget effectively and maximize your profit. Here's a comprehensive guide to help you navigate the financial aspects of selling your home.
While not mandatory, a pre-sale home inspection may be a wise investment. For around $400 or more, an inspection can uncover issues that you may not have known existed. Knowing what needs fixing in advance allows you to address problems on your terms, potentially avoiding last-minute surprises.
Before listing your home, you may need to invest in minor repairs or improvements. Addressing minor issues like leaky faucets or chipped paint can make your home more attractive to buyers. In some cases, significant upgrades like a new roof or modernized kitchen can increase your home's value, potentially allowing you to recoup these costs at closing. However, be mindful that not all improvements guarantee a return on investment, so focus on those that add the most value.
Offering a home warranty can be an attractive perk for buyers, especially if your home is older. A home warranty typically costs between $300 and $600 and covers major systems and appliances for the first year after the sale. This can provide peace of mind to buyers and help your home stand out from others on the market.
Sellers often share closing costs with buyers, though the exact distribution can be negotiated. Typical seller closing costs include prorated property taxes, title insurance, transfer taxes, and attorney fees. These costs may vary but generally range from 1% to 3% of the home's sale price. Buyers sometimes ask sellers to cover part or all closing costs. This request is more common in slower markets. While agreeing to cover these costs can reduce your net profit, it might be necessary to close the deal, especially if your home has been on the market for a while.
If you still have a mortgage on your property, the remaining balance will be paid off from the sale proceeds. Keep in mind, the payoff amount might be slightly higher than your last mortgage statement due to prorated interest. Additionally, check if your loan includes a prepayment penalty, which could add to your costs.
While many unavoidable expenses are involved in selling a house, some costs are not required but can significantly influence how quickly and smoothly you can go from “for sale” to “sold.”
First, contact a real estate agent. Your agent has extensive knowledge of the local real estate market, including trends in property values, neighborhood features, and the latest data on comparable homes. They can also help you prioritize necessary repairs, guide you in staging your home, and market it. There are an abundant amount of benefits to working with a real estate agent that far outweigh the costs. Check out “Why Real Estate Agents Matter: Expert Help for a Stress-Free Home Sale” on our blog for more information.
Home staging can be a powerful tool to help your property stand out in a competitive market. Professional stagers arrange furniture and decor to highlight your home's strengths, making it more appealing to potential buyers. While staging costs can vary, expect to pay several hundred dollars at a minimum, with the total depending on the size of your home and the length of time it's on the market.
Although buyers usually arrange for an appraisal, some sellers can opt to get their own pre-sale appraisal to set a realistic asking price. A pre-sale appraisal, typically costing between $300 and $600, can provide you with a clear understanding of your home's market value and prevent pricing issues during negotiations.
High-quality photos are essential for online listings. Investing in professional real estate photography, which can range from $100 to $500, can make your home look its best and attract more potential buyers. Your real estate agent can help you find a professional photographer.
If you move out before your home sells, you'll still need to maintain basic utilities like water, electricity, and gas. A home without these essentials can be challenging to show, and keeping the lights on helps present your property in the best possible light. Use your current utility bills to estimate these ongoing costs until your home is sold.
While selling a home comes with inevitable costs, there are strategies you can use to reduce these expenses.
Consider handling some tasks yourself to save money. For example, you could take on home staging, minor repairs, and even marketing your home on social media. While these tasks require time and effort, they can significantly reduce your overall selling costs
From home inspectors to photographers, prices for professional services can vary widely. Get quotes from multiple providers and ask for referrals to ensure you're getting the best value for your money. Don't hesitate to negotiate fees or look for discounts, especially if you're bundling services like staging and photography.
Timing can be everything in real estate. Selling your home in a seller's market, when demand is high and inventory is low, can lead to a quicker sale with fewer concessions. Additionally, avoiding the slower winter months can help you sell at a higher price, reducing the need for costly incentives.
Selling a home involves various costs, both expected and unexpected. Remember:
By understanding the most common expenses when selling a house, evaluating optional costs, and being prepared for other costs, can help you make informed decisions that maximize your return.