The True Cost of Selling a House

When it comes to putting a house on the market, most homeowners only think of the commission a real estate agent charges to sell the home.

In reality, there are other costs involved, both before closing, and that will come out of your proceeds at closing.

While sellers can keep costs to a minimum, there are some that are not negotiable, and others that the buyer may be willing to pay. Additional costs a seller can expect to pay are:

• Keys – Unless you have a couple of extra sets of house keys, you’ll want to make at least one set of keys that will go in the secure lockbox for agents to gain access to the house for showings.
• Seller’s Home Warranty – If you don’t have your own current home warranty, you may want to consider buying a warranty for while your home is on the market. It will protect you from unseen costs if something goes wrong with your home’s systems. Some warranties can be assigned to the buyer at closing.
• Buyer’s Home Warranty – I’m seeing buyers ask for home warranties about 50% of the time in this market. You’ll provide a credit at closing for the buyer, and they will use that credit to purchase a home warranty of their choice. I’ve seen $450-$650 in this category.
• Survey – If you have the survey from when you purchased you home, the buyer may be able to use that instead of getting a new one. In the current market, if a new one is needed, sellers are typically paying for the survey.
• Owner’s Title Policy – There are two title policies in your typical real estate transaction, the owner’s title policy, and the mortgagee’s title policy. The buyer pays for the mortgagee policy, which protects the lender. In this market, sellers usually pay for the owner’s title policy, which protects the buyer.
• HOA Documents – Buyers can opt to receive copies of documents for the homeowner’s association if a home is located in one. These documents can sometimes be found for free online, but if they need to be ordered separately, it’s negotiable between the seller and buyer who pays. They can range from $500-$1,000.
• Closing Fees – The title company that coordinates the transaction charges its own fees, which include escrow fees, attorney fees, costs to record documents, and others. These costs can be around $1,000 depending on the title company.
• Costs to Prepare Your House for the Market – Most sellers do at least some minor work on their home prior to selling. It’s more cost effective to take care of known repairs in advance rather than after the home is under contract. Items to consider include roof repairs, servicing your HVAC system, a neutral paint color, and replacing work carpet. If you have a pool, make sure the equipment has been serviced and the water is in good shape. If you want to make more significant updates, there are programs like Curbio that allow you to pay for renovations out of your proceeds at closing.
• Staging – Depending on the price point of your home, the market, and if your home will be vacant while on the market, you may consider professional staging. My listing clients receive a complimentary 2-hour consultation with a professional staging consultant, and a detailed list of what you can do to best prepare your house for closing. If your house will be vacant or there are some pieces that if added can make a big difference, a staging consultant can provide rental options, as well as returning prior to photography to make sure everything looks just right when the photographer gets there.

Once your house is under contract and the buyer has done their independent inspection, the buyer may ask you to make certain repairs, or to give them a credit or price reduction to cover those costs. If your closing date for the sale of your home doesn’t quite line up with the purchase of your forever home, you may need to lease back your home from the buyer for a few days, and the buyer is likely to charge for that. For situations where that isn’t possible, you may be looking at costs for short-term housing or storage for your belongings.

I recommend buyers have a cushion in addition to their down payment, and I recommend the same thing to sellers. While many sellers are relying on the equity they’ll receive at closing from selling the home, you don’t have access to that until closing. Before putting your home on the market, I recommend you have an about 1% of your sales price set aside in addition to the money you may spend on staging and preparing your home for sale.

It’s better to be over-prepared than to run into an unexpected cost or timing issue that can throw your home sale off track, which then puts a wrench into the process of buying your next one. Before starting on the journey to buy your next home, make sure you are clear on your finances and the true costs of selling.

Have questions about selling or ready to get started? Contact me. I’m here to help.