Costs Associated With Selling Your Home
Although selling your home can be profitable, selling also costs money. To help you avoid surprises and budget for these expenses, below we’ve outlined 10 common costs of selling your home.
Repairs
First things first, before officially putting your house on the market, let your real estate agent know anything in the house that is not in working order. Your real estate agent will advise you on anything that needs to be fixed or spruced up prior to listing for your home to shine its best. Note that the buyer will also send a home inspector to evaluate the house during escrow and may request that you make additional fixes. Factor in these costs as well.
Upgrades
Repairs are to ensure that everything works. Upgrades are to make the space look more enticing to buyers and also add more value. Get the most bang for your buck by sticking to small upgrades that make a big statement—think a fresh coat of paint, shiny new hardware and fixtures, and sprucing up the landscaping. If you’re not sure what upgrades are worth the time and investment, your Pardee agent will advise you on the most cost-effective upgrades to help your home sell faster.
Marketing costs
Getting potential buyers to notice your house also costs money. Costs include professional photography, flyers, for sale signs for outside the home, open house supplies, and fees associated with listing the property on the MLS. Fortunately, Pardee covers ALL of these costs for you! On the other hand, if you’re selling on your own, you’ll have to factor these into your selling budget.
Real estate Professional fee
It is customary for the Seller to pay the professional fee for the Seller’s real estate agent – the Listing Agent – out of the proceeds of the sale. You may also choose to provide a commission to the Buyer’s Agent, but that is optional. Thankfully, you don’t have to pay this upfront but rather during closing.
Cleaning, decluttering, and staging
Part of making your home look in tip-top shape is also giving it a good deep clean, clearing out any clutter that makes it look less desirable, and staging the furniture and decor to make it more appealing. Potential buyers love to see spaces that are spacious, clutter-free, and well-decorated because it allows them to envision living there. You can do the cleaning, decluttering, and staging yourself, saving you money, but it takes up time and energy. Or, you can outsource the tasks to professionals. Prices will range, but your Pardee Agent can source several staging bids using our preferred pricing so you get the best bang for your staging buck.
Your time and energy
Whether you decide to do a lot of the selling tasks yourself or hire other people to help, the home selling process will still require you to invest a significant amount of your time and energy. This may take you away from other responsibilities in your life, so ensure you factor that into your selling costs as well. However, Pardee Prep – our Concierge service – allows you to save some of your time by having us oversee vendors, source bids, and schedule cleanings for you.
Moving costs
Once you finally close the sale on your house, it’s time to pack up and move, and that can cost dollars too. Costs can include hiring movers, packing materials, and furniture for your new home. If you haven’t yet purchased a new home, you may also need to find temporary housing and storage for that gap of time. Your Pardee agent will advise you and provide you with options on how to bridge the time gap between selling your current home and moving into your new home. We have successfully managed this process for so many of our clients – you aren’t alone!
Closing costs
Buyers incur closing costs, and sellers do too. Sellers usually pay, on average, 1-3% of the home’s total selling price in closing costs in addition to the professional fee paid to their agent. These costs can cover escrow fees, property taxes, transfer taxes, title insurance, HOA fees, and even fees for government-required reports
Seller concessions
Buyers may also request that you cover some costs, such as a loan interest rate buydown and the home warranty to make it more affordable to buy – especially for first-time buyers. The number of concessions allowed depends on the loan and downpayment and can range from 2-6 % of the selling price. However, for many Sellers, giving closing cost credit concessions can pay off by making your home more attractive and easier to purchase for a lot of Buyers.
Taxes
Selling your house also means you’ll potentially have to pay capital gains taxes, which taxes you on the net profit of your house sale. There are exemptions. For example, if you lived in the house as your primary residence for at least two of the last five years, you don’t have to pay capital gains taxes on $250,000 of the net profits if single or $500,000 if you are married filing jointly. If the home wasn’t your primary residence or if you made more profit, you’ll pay capital gains taxes, which vary between 0-20%, plus the potential Net Investment Income (NII) tax, plus depreciation capture — depending on the amount and your tax filing status. If you’d like more information or if you’re looking for a way to defer your capital gains taxes, connect with us to learn about 1031 exchange strategies.
