If you are listing your house for sale, you want to be aware of the possible costs that may arise during the process. Here are 10 common selling costs for homeowners:
1. Loan payoff:
- Loan payoff:
This is the amount of money you need to pay off your mortgage, which is sometimes referred to as “paying off the loan.” You can do this by selling your home or by paying off the mortgage. Some people choose to keep their mortgage when they sell the house because it can make sense if interest rates are low and/or if they plan on moving again in a few years.
2. Real estate commissions:
Realtors are not paid by the homebuyer. The seller pays real estate commissions to their agent(s), which are typically between 3% and 6% of the home’s sale price. When you’re selling your home, you’ll need to pay your agency (or agencies) a commission if they sell it for you. It’s also common practice for agents to split their commission with another agent who helped them in some way during negotiations or finalizing details on the transaction.
For example, if you hire an agent to list your house at $300K and it sells for $350K after one month on the market—without any other service provided by either party—your listing agent would receive 2%, or $7K, while your selling agent would receive 2%, or $7K (split equally).
3. Pre-sale repairs and updates:
- Pre-sale repairs and updates
The costs of repairs and updates can be significant—and they’re often the biggest obstacle to selling your home. You can reduce these costs by doing the work yourself, or by hiring a contractor for the job. If you decide to hire someone, make sure they provide you with an itemized list of their services so that there are no surprises when it comes time to pay them.
4. Offer renegotiation fees:
Offer renegotiation fees: This is a fee that is charged by a real estate agent to negotiate a higher offer on behalf of a seller. It is typically paid by the seller, and it’s usually done before an offer has been accepted.
This service can be extremely valuable for sellers—especially if they’re in need of quick cash or aren’t sure how much their home might sell for. Although not all agents provide these services, they do exist and are worth researching before you find yourself with little time to accept an offer on your house.
5. Moving costs and living expenses during sale:
Moving costs and living expenses during the sale of your home are two of the most common costs homeowners face. Moving costs can be expensive, especially if you hire a third-party company to move your belongings. But moving costs are usually the same regardless of where you move to—no matter how far away or how much it might cost to get there, there’s no escaping that expense. The best way to save money on this aspect is by doing it yourself or hiring movers who offer their services at a reduced rate (think college students looking for extra cash).
Moving during off-season months can also help reduce some expenses like utilities and groceries.
6. Property taxes prorated for the year of sale:
The seller of the home has to pay the property taxes for the year of sale.
If you are selling your home, it’s important that you get an estimate of how much your property taxes will be for the upcoming year. If you don’t know how much these annual fees will cost, and if they aren’t paid on time, then there could be some serious consequences. For example, if you miss a payment on your taxes or have them sent to collections agency and your credit score suffers as a result — even if only temporarily — this could affect whether or not someone else is willing to buy your house from under you at all!
7. Attorney fees:
- Attorney fees:
If you’re selling your home, you’ll need an attorney to help with the paperwork and any issues that may come up during the sale process. In most states, sellers are required to hire an attorney in order to ensure the proper transfer of title and avoid any potential problems that could arise from not having one involved (for example, if your buyer has a poor credit score). If you’re buying a new home, then an attorney will also likely be required for closing on your purchase as well.
8. Title insurance premium (usually paid by the buyer):
Title insurance is usually paid by the buyer, but it’s worth noting that it can also be required by your lender. Title insurance protects both the buyer and seller against any title defects, so if there are any issues with a property’s ownership, this coverage ensures that everyone involved is protected.
9. Taxes on capital gains (for sellers who’ve owned their home less than 2 years):
Capital gains taxes are generally due on the profit made when selling a home. For example, if you purchased your home for $200,000 and sell it for $300,000, your capital gain would be $100,000.
The good news is that there’s an exclusion for long-term capital gains (and qualified dividends) that allows homeowners to avoid paying this tax altogether—if they qualify of course (see item #1 above). But if you don’t meet the requirements, then capital gains taxes are due on the difference between the selling price and original purchase price.
10. Property Tax Service Fee (usually paid by the seller):
The property tax service fee is a small percentage of the home’s value, so it’s usually paid by the seller. You can think of it as a “property transfer tax,” which typically goes to your county’s county auditor or treasurer.
There are several costs associated with selling a house, some of which people don’t expect or realize until they’ve sold their home and need to pay these bills.
When selling a house, there are several costs associated with the process. Most of these costs are upfront, which means that once you’ve paid them, you’re done. However, there are also other expenses that may come up after the sale has been completed. For example:
- You might be required to pay for any outstanding taxes on your home or even a new tax bill for property taxes during the time period between when you move out and the closing date on your house. These bills can be thousands of dollars and need to be paid before closing can occur.
- If there were items inside your home when you sold it that were not part of the sale agreement (such as appliances or furniture), then those items belong to whoever purchased your home after they bought it from you—and now they want them back!
Conclusion
Check with your home loan provider to see if they offer any incentives or discounts for buyers who are willing to pay up front. Look into how much you can save by using the services of an attorney rather than a real estate agent.
