Most people expect to pay a real estate agent a commission for selling a house. The unfortunate part of selling a house is that there are costs and fees you tend to overlook in the chaos. Some are negotiable, like real estate agent commissions, while others, like taxes, are not. Either way, it’s best to be prepared to pay for more costs and have more you make on the sale of your property than being surprised with a lot less from the sale. We’ll go over what to expect as an overabundance of costs so that you walk away with more than you plan to. Let’s start with the most significant real estate fees for selling a house.
Realtor Fees For Selling A House
The first thing you probably want to answer is, “What are the realtor fees for selling a house?” Historically, those fees range from 5 percent to 6 percent. So the average home sale in America as of Q2 2023 ($495,100) could cost almost $25,000 to $30,000. You can also check out your state’s average sales price to determine your commission cost.
Even though this is the most significant, they are generally negotiable. You also have places like Redfin with lower list fees and even the option of using a flat fee listing service to help you save on agent commissions. The thing to remember on this, though, is that it has traditionally been split between your listing agent and buying agent. An antitrust lawsuit may change how Realtor commissions work in the future.
Using a real estate agent will be a significant cost, but the cost-value benefit still weighs positively on listing with a Realtor. In 2022, only 10% of all homes sold were FSBO (For Sale By Owner), and nearly half already knew their buyer. FSBO homes sold at a median of $225,000 in 2021, whereas agent-listed sales had a median price of $345,000. With a difference of $120,000 on selling FSBO vs. with an agent, the net difference in selling with an agent could be $95,000 to $100,000 positive in your pocket.
Unavoidable Costs of Selling
Unfortunately, some costs will eat into the proceeds when selling your house. These will depend on your city, county, and state laws on the specific percentages and the exact fees that will be assessed when selling your house.
Closing Costs For Selling Home
Both buyers and sellers cover closing costs for the sale of a home. A buyer will cover, on average, about 2 percent to 6 percent of the loan amount. This may be in addition to the down payment. As a seller, your costs could vary an additional 2 percent to 5 percent on top of the agent’s commission. Let’s look at some of the ones you’ll see when selling.
Paying Title Fees At Closing
Buyer’s title insurance is an expense usually paid for by the seller. This insurance ensures that when titling the property over to the buyer, there are no additional, uncovered encumbrances or liens to the property. You can expect to pay from 0.5 percent to 1 percent for it. This can also vary depending on local laws to be negotiated by either party.
Paying Taxes At Closing
Unfortunately, the government still wants its share of the pie, and you will be taxed when you sell the property. Here are a few to look out for:
Property taxes: These are paid for every year but will come from your proceeds based on the time you have sold and when they are paid. Your closing agent will split them based on when the buyer takes ownership of the property, and each party will be responsible for their appropriate amount.
Capital gains taxes: If you profit from the sale of your property and have not lived in your home, you will be responsible for paying the government their portion of that sale. The good news is that if you have lived in the home for 2 of the last 5 years, you have an exemption you will qualify for. If you are selling a vacation home or investment property or have been lucky enough to have the value of your home grow over the exemption amount, you may be responsible for the taxes on the property. Talking to your tax advisor or financial planner about it is best.
Transfer tax: These taxes pay for processing the real estate transaction. They are generally lower, but your tax rate may vary depending on your state and county. You may have to pay taxes when transferring the property to the buyer. Some states may even charge a mansion tax on luxury properties that sell for over seven figures.
Mortgage Payoff
The sale proceeds of your home will go towards paying off the principal balance of your loan. Your closing specialist, like an escrow or title agent, will get the final amount which may vary from the amount you think you owe, but it won’t be by much and may even be less than you think. When you call your mortgage servicer to find the payoff amount, check on any prepayment penalties that may be assessed when selling your house.
Utilities Still Connected
There will be some fees for keeping the utilities connected while you wait for the sale of your house, whether you’re living there or not. If you are not living there, your usage will be down and cheaper than your monthly bills. Depending on when you’re selling your house, you may want to maintain an average room temperature to ensure no problems occur in the residence. Plus, keeping the electricity and gas on will allow buyers to view your home comfortably, encouraging them to buy it.
If you want to skip some of these fees and or save money by having a fast closing, fill out this short form to get started on an offer for your home. We can have that to you in as little as 24 hours and ready to close in about a week.
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Optional Costs To Sell Home
These expenses may not be needed but may significantly reduce the sale time or the frustration with selling. These optional costs may get you a higher fair market value or reduce the chances an agreed contract doesn’t close.
Costs For Prepping Your House To Sell
Getting your house ready to sell before it hits the open market can be a significant cost. These in particular may discourage sellers from backing out of a contract or making a lowball offer. Let’s check them out.
Pre-Sale Home Inspection
A pre-sale listing inspection may cost $280 to $600, with an average cost of about $340, but it is worth its weight in headache savings. It will provide you insight into any repairs that need to be made (which will cover in a little bit) and reduce the likelihood that a buyer will ask for repair concessions (which we’ll also cover in a little bit). Remember that you must disclose any material defects you find to any potential buyer. So consult your real estate agent, if you’re using one, to receive their thoughts on it.
Home Warranty
Another option to combat defects or issues you find is a home warranty. The average home warranty costs around $600, with a range of $275 to a comprehensive, large-sized home warranty that’s about $1,425. These warranties will cover things from the appliances to the plumbing to any permitted additions and will leave the buyers with peace of mind, knowing that you ensured that everything is in good shape now and will be that way in a year.
Home Repairs or Updates
Sometimes, to get top dollar, you must make repairs or updates to the home. These costs vary significantly but must be done before listing the home on the open market. You can use the pre-sale home inspection to guide these costs, or you can ask for the expert advice of your real estate agent. They will likely be updated on design trends and what will make your home stand out more.
Listing/Under Contract Costs For House Selling
Staging and Photos
The second best way to improve the sales price of your house is by staging your home. Staging your home can give you an additional 8 to 10 percent return on investment and help you sell in 75 percent less time. This can cost anywhere from a few hundred dollars to 1 percent of the sale of the house. Remember that curb appeal is just as important as the interior of your house, and you may have to hire a landscaper to maintain the property.
Sometimes, an agent will not include the cost of listing photos. If they do not, these can range from a couple of hundred dollars to thousands using 3D home mapping like Matterport, drones, and adding floor plans. This is an important cost and should not be skipped as it is where over 90% of people obtain their first impression of your home.
Seller Concessions
Sellers are generally allowed to inspect the property unless they have waived the right to do so. After inspecting the property, they can ask for the repairs or credits toward them to make the repairs. Not taking care of the requested repairs can lead to a backed-out contract and sitting on the market longer, so getting the repairs done or giving the buyers credit is best to close the sale.
Sellers don’t have to wait for the inspection to ask for credits. They can do so through the contract. Depending on whether it’s a buyer’s or seller’s market, you may want to help the buyer purchase the house. The ultimate amount you can credit them will depend on the loan product they use and the down payment amount they put down for the purchase.
Incidental Moving Fees
Some people will have to pay for movers. Others may pay to have the place cleaned between moving and packed up so that a final walkthrough is spotless. These are all things that are entirely optional and not even close to being used every time but would end up coming out of your pocket. These costs could range from a couple hundred for just a truck for moving to thousands for moving cross country with movers who pack for you. The amount of help, the house’s size, and the move’s distance will dictate pricing. As far as cleaning, you can find a cleaning company that will do thorough cleaning for an affordable price.
Final Thoughts On The Typical Costs of Selling a House
As you can see, selling a house takes money, and the costs vary significantly. The two ways to overcome this are to create competition for your property or reduce costs. Knowing your options, like listing with an agent or discount broker like a flat fee broker or just selling to an investor like SILT Real Estate and Investments, LLC, will give you the choices to make the right decision. If you want to see what we can offer you on your home in as little as 24 hours, fill out the short form below or call (708) 415-3801 to ask us any questions or get started on your offer immediately.
