The Hidden Costs of Selling Your House

Selling a house is not just about handing over the keys and receiving payment; it encompasses several hidden costs that many sellers overlook. In fact, while the increase in your home's value over the years may excite you, it's vital to consider all the potential expenses involved in selling your home.

As reported by Zillow, sellers on average spend seven months preparing to put their house on the market and three more months to finalize the sale. Let's dive deep into the intricacies of these expenses.

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The True Price of Selling a House

While you may be tempted to focus on the final sale price, the actual transaction costs can be substantial. Standard closing costs can reach up to 6% in commissions for both your real estate agent and the buyer's agents. On top of this, sellers may also face transfer taxes, property taxes, attorney fees, and various real estate-related costs that could add another 2% to 4% to your bill.

The Real Breakdown of Home-Selling Costs

Cleaning: A professional deep clean, including carpet and window cleaning, ensures the house shines for potential buyers.

Staging: With 48% of recent buyers stating that a staged home was crucial during their purchase decision, decluttering and adding minimalistic touches can add value.

Landscaping: First impressions count. Therefore, maintaining a pristine lawn, a lit walkway, and seasonal decorations can make a significant difference.

Home Improvements: Depending on your target audience and local market needs, updating old systems or adding modern touches can be beneficial. Notably, 79% of sellers undertake home improvements before selling.

Marketing Costs: Listing on local MLS might have fees, although sites like Zillow offer free FSBO listings.

Pre-inspection: With Zillow indicating that 15% of deals fall through due to post-inspection disagreements, a pre-inspection, costing between $250-$700, provides clarity on your home's state.

Vacating Costs: Moving out comes with its own set of expenses. These can include temporary housing costs due to overlapping mortgages, utilities, moving costs, and even homeowners insurance for vacant properties.

Seller Concessions: 83% of sellers, as stated by the Zillow Consumer Housing Trends Report, make some trade-offs with buyers. Common concessions include post-inspection repairs, home warranties, and credits toward closing costs.

Closing Costs for Sellers: With the median U.S. house price at $217,000, typical closing costs for such a property can range from $17,000-$22,000. These costs include agent commissions, transfer taxes, title insurance, escrow fees, prorated property taxes, HOA fees, and attorney fees.

Real Estate Fees and Taxes: Beyond the closing costs, the seller must consider outstanding mortgage balances, capital gains tax, and any associated penalties.

Using a practical example for a $200,000 home, the estimated costs could be:

• Home preparations: $5,000
• Commissions: $13,200
• Utilities: $258
• Escrow: $1,000
• Title insurance: Between $1,000-$4,000
• Potential costs: Between $5,150-$6,800

Net proceeds could range from $24,742-$29,392, with transaction costs taking up about 44-53% of the equity.

Conclusion

When deciding to sell your home, it's important to consider all potential costs and not just the anticipated profit. Being well-prepared can save you from unexpected surprises and ensure a smoother selling process. Always consult with professionals, leverage tools that are available to you, and be prepared for the journey ahead.

Source:

Zillow

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