Selling a house is related to lots of stress and problems. Especially if you’re selling your house for the first time – then you’re dealing with lots of emotions at hand.
Selling can get complicated, and rather costly. That is why lots of people prefer to get real estate agents involved to help them out. All that adds to the closing costs, and sometimes, we wish to avoid all that.
So, what is the cost of selling a house? Do you know all the costs that come hand in hand with selling your personal property?
If you wish to get acquainted with all that comes with selling a home like the closing costs, continue reading to find out!
What Are Closing Costs?
Many people when they are selling their house and looking for a new one are focused on the down payment. The common mistake is not taking in the closing costs – which come in when your loan closes.
The closing costs are the fees for taking out a mortgage, and they are paid during the closing. The closing costs vary – for sellers, the transaction costs vary between 1% and 3%, while the buyers are dealing with higher costs.
While the closing fees are paid at the end, just like the agent commissions, they are still two separate things. The seller is obliged to pay the closing agent, as we already mentioned, the property tax, the attorney fees, recording fees, a transfer tax, and any costs associated with their previous mortgage.
The closing costs for sellers are fees used to pay the closing agent for his work, and the real estate agent commissions can rack up the amount significantly. The fees are paid at closing, and after that, the title of the property is transferred to the buyer of the home.
The lending institutions have to provide the loan estimate within 3 business days upon applying for a loan. Among other things, you will be able to see what are the fees you have to pay as a seller.
How Much Are The Closing Costs?
We already talked about the closing costs and what they are. We mentioned that the closing costs are between 1% and 3% on average. However, you will be able to see the total expenses when you get the loan estimate. There are many sites online that offer a calculator for you to see all the costs to sell your home.
For example, if your house is sold for $300,000, you will pay between $3,000 and $9,000 in closing fees. The seller commonly pays the closing costs as a one-time expense on the closing of the sale.
However, many things are included in the transaction costs and don’t let us even get started on the relocation costs. Let’s check out how much each cost to sell your home is!
The transfer taxes are taxes or fees paid when the title of real estate (any property) is transferred from one person to another. The transfer tax can be assessed at municipal, county, or state levels for homes.
The fee you will be required to pay as a seller varies from place to place – for example, 12 states don’t charge any transfer tax at all, on any type of real estate. The state of Arizona requires the seller to pay a flat transfer tax of $2. Great right?
Well, the remainder of the states does require you to pay transfer taxes. The amount varies from state to state, though – the transfer taxes can cost anywhere from 0.01% to 5% of the total purchase price.
Once everything seems done, at last, your mortgage will come up. The moment you sell the property, you will need to work on settling your mortgage loan and pay it off.
Since you got the money from the sale, you will use that money to pay off the old loan. However, the problems can start if the amount of money you have doesn’t cover the prorated interest.
If the funds you got don’t cover the entirety of your mortgage, you might need to cut a new check or use your credit card to pay the lender and settle the loan. Also, there is another problem that might rake up the costs of selling your home.
That is the prepayment penalty – the penalty people pay if they pay off the loan ahead of schedule. The prepayment penalty amount varies, but they are usually set at 2% to 4% of the total mortgage amount.
Buyer’s Home Warranty
The home warranty may seem similar to the homeowner’s insurance, but it has a different scope in reality. The homeowner’s insurance covers the structural aspect of the home, in the events of damages caused by natural disasters of all sorts, or fire.
The home warranty covers the repairs or replacement costs for the various systems in the home. For example, the home warranty can cover the cost of replacing kitchen appliances, air systems, plumbing, or heating.
It’s not uncommon that the seller offers to buy the warranty to cover the home during the sale. Sellers offering to buy a home warranty is a great sign because the home buyers will know they won’t be stuck with paying various repairs that insurance doesn’t cover costs as soon as their mortgage clears.
Also, it’s common for sellers to buy the home warranty for the next year or two after closing on the home. The buyer’s home warranty can cost anywhere between $300 and $600 – but you’re not required to buy it. Simply, it’s a nice touch to include in the purchase contract and the buyers will certainly appreciate it!
How Much Does It Cost To Sell A House?
When you are looking to sell your home, you will need to prepare your house for listing. Your home will need some improvements if you want the selling process to be fast. It’s not all about the real estate agent commission, other things can affect the cost to sell a house as well.
A home that looks nice and inviting is just good business. If you want to attract lots of buyers, keep in mind that there are four important aspects to think of when you’re preparing your home for sale. So, let’s begin with the costs of selling!
When you’re selling your home, you want the buyers to focus on the best things the house can offer. Also, you want them to imagine themselves living in your house, preferably as soon as they enter.
Staging is the important part of the selling experience – and it involves arranging furniture and adding decor t make the house look as attractive as possible.
The average cost of getting a professional real estate stager involved in the selling is from $2,300 to $3200. Of course, you can save that money by doing it all yourself, but keep in mind that you will have to take your time preparing each room for the viewing.
If you decide to do the staging yourself, keep in mind the things you will need to keep in mind all the things required to sell a house. You will need an extra coat of paint in at least some of the rooms, some new furniture, or new lighting, as well as new curtains and decor.
For home improvements, you will need to hire a carpets cleaning vacuum, which costs from$35 to$50 for the day, or a professional carpet cleaning service, which can cost over $500.
Staging can pay off when you are looking to sell your house. Staging can increase the value up to 10%, and that transaction could well cover the staging costs, as well as the real estate commissions. The staging costs usually rack up under 1% of the home sale price.
Costs Of Landscaping
The front and the backyard are as important as is the inside of your home. The appearance of the curb can attract buyers, especially those that like to look online for listings.
Some flowers, mulching, taking care of bushes, and some lawn care can do wonders for your home. All real estate agents will agree that landscaping is principal when you want to sell a house.
At the very least, if you want to take care of the landscape, you will need to spend a few hundred dollars to spruce it up a bit. However, a more comprehensive service like planting flower beds, taking care of trees and so on – is a little over $3,000. Of course, do note that this price varies on the size of the yard and the current state of it.
Maintenance, Improvements, and Repairs
Maintenance issues are perhaps the most important reasons why you fail to sell your house. If you’re selling with a realtor or alone, make sure that the home is in great shape before you list it – that way you will avoid seller concessions.
Prepare your house for the listing and check out the home improvements that need to be done. Look for damaged features, spaces that could benefit from renovations, cleaning, broken appliances, damage to the flooring, and the state of the bathrooms.
Moreover, give hiring a professional home inspection a thought. They have a checklist of all the things that affect the sales price, and what each buyer or agent is looking for. There is no right answer as to how much the whole deal can cost because it depends on the condition of the home.
Some renovations could increase the market value of your home and make your home more attractive to any buyers. Sprucing up the kitchen could give you a great return on investment and increase the sale price. You can remodel the kitchen yourself or hire a pro – but hiring a pro can be a rather expensive route.
Consider making the smaller renovations that every buyer would appreciate, especially if you don’t have a lot of money to spend on this. Instead of a whole kitchen remodel, consider doing updates to the cabinet pulls, and putting a new backsplash. It could make the whole kitchen seem so much better and increase the sale price!
Real Estate Agent Commission
Working with a listing agent means that they will work the real estate market for you and contact the buyer’s market. They will complete home tours, doing the paperwork, update the home listing, prepare the home photography session, and so on.
Furthermore, hiring a real estate agent means that the sellers don’t have to talk to any buyer or deal with home sales in any way. However, these services aren’t free, just like attorney fees.
Sellers are required to pay around 5% to 6% of the home sale price to cover the agent commissions. For example, if the home price is $400,000, you will need to pay a cost varying from $20,000 to $24,000.
The commission fees are split between the selling and the buyer’s realtor. Of course, there is always the option of selling without a realtor, but you will still be required to pay the commission fee of the buyer’s agent. That cost is about half of what you would usually pay, so 2.5% to 3% of the total sale price.
Do keep in mind that most buyers do opt for working with a real estate agent rather than looking for a house alone. That makes paying the buyer’s commission an almost inevitable part of the experience.
How Much Does It Cost To Sell A House? – Bottom line
To conclude, there are various things included in the transaction costs to sell a house. Besides the realtor commission and the buyer’s agent commission, the sellers will need to pay various fees like the escrow fees, the title insurance policy, the property taxes, as well as various updates and repairs of the home.
The costs of the sale could cost you well over 10% of the sale price, and that could just be too much. Fortunately, all that can be avoided by selling your home to a cash buyer like us, Move On Cash Home Buyers!
Get the most out of your sale price, and get a cash offer today, no agent, no buyer’s agent, no property taxes, nothing. Avoid the pesky topics like the state of the roof or other repairs and get a sales price estimate today!
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