The Hidden Costs of Selling a Home

Selling a home is exciting, but it’s important to know that it comes with more than just finding a buyer. Many sellers are surprised to learn about the various hidden costs that can pop up during the process. Let’s break down what to expect so you can plan ahead and avoid any last-minute surprises.

1. Real Estate Agent Commissions

The biggest expense for most sellers is the real estate agent’s commission. This fee typically ranges from 5% to 6% of the sale price and is split between the buyer’s and seller’s agents. While it might seem like a lot, working with a professional agent can help you sell your home faster and for a higher price, making it well worth the cost.

Example: If your home sells for $400,000, you can expect to pay between $20,000 and $24,000 in commissions.

2. Home Repairs and Improvements

Before you list your home, you’ll want it to be in top shape to attract buyers. This might mean making some necessary repairs, such as fixing a leaky roof, repainting walls, or upgrading outdated fixtures. Even if your home is in great condition, small cosmetic improvements can go a long way in boosting your home’s appeal.

Pro Tip: Prioritize repairs that offer the highest return on investment, like kitchen updates or fresh paint, which can significantly improve your home’s perceived value.

3. Staging and Photography

First impressions matter, especially in real estate. Many sellers opt to stage their home to make it look more appealing to potential buyers. Staging involves arranging furniture and décor to highlight the home’s best features. You may also need to hire a professional photographer to capture high-quality images for your online listing.

Cost Breakdown:

• Home staging: $3,000 to $30,000, depending on the size of the home.
• Professional photography and videography: $500 to $2,000, depending on the size of the home.

Staging and great photos with video can help your home sell faster and potentially for a higher price.

4. Closing Costs

As a seller, you’ll also be responsible for certain closing costs. These fees typically range from 1% to 3% of the sale price and can include:

• Title insurance: Protects the buyer and lender from any legal claims on the property.
• Transfer taxes: These are taxes paid to the state or local government when the property ownership is transferred.
• Escrow fees: These cover the services provided by the escrow company that manages the sale.

Example: If your home sells for $400,000, you might pay $4,000 to $12,000 in closing costs.

5. Pre-Sale Inspection and Appraisal

While inspections are typically the buyer’s responsibility, some sellers choose to have a pre-sale inspection done to identify and address any issues before listing the property. This can help avoid any surprises during the buyer’s inspection process. Additionally, you may need to pay for an appraisal to determine your home’s current market value.

• Inspection cost: $300 to $800, depending on the size of the home and what type of inspection (general or specialized).
• Appraisal cost: $500 to $700, this is lender based

6. Moving Expenses

Don’t forget to factor in the cost of moving! Whether you hire professional movers or rent a moving truck, the expense of packing up your belongings and relocating to your new home can add up quickly.

Estimated costs:

• Local move (within the same city): $500 to $2,000 or more, depending on mover.
• Long-distance move: $2,000 to $5,000 or more, depending on the distance.

7. Capital Gains Taxes

If you’ve made a significant profit on the sale of your home, you might owe capital gains taxes. However, there are exclusions that can reduce or eliminate your tax liability. For example, if the home has been your primary residence for at least two of the last five years, you can exclude up to $250,000 of profit if you’re single, or $500,000 if you’re married.

Be sure to consult with a tax professional to understand how capital gains taxes might apply to your sale.

Plan Ahead for the Costs of Selling

Selling a home involves more than just finding a buyer and signing the papers. From agent commissions to staging and closing costs, it’s important to be aware of the various expenses you may encounter along the way. By planning ahead, you can budget for these costs and ensure that you’re fully prepared for a smooth and successful sale.

If you have any questions or need help navigating the home-selling process, I’m here to help! Let’s chat and make sure you get the most out of your home sale.