Selling your home is one of the largest financial transactions you will make in your lifetime. Because of that, it’s not unusual for homeowners to focus only on the listing price and/or final take-home profit when the sale is complete. However, many sellers have the unpleasant surprise of unexpected costs during the selling process.
To help you plan your sale budget, we consulted reliable real estate resources for a list of hidden costs you may be missing. Understanding what to expect can help you budget properly and avoid last-minute financial stress.
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Real estate agent commissions
The first significant expense is the agent’s commission that you pay when selling a house. The commission for real estate agents is often set at 5% to 6% of the home’s selling price. So, a 6% commission on a $300,000 house sale would be $18,000 in commissions due when closing the transaction.
Closing costs
Another possible oversight is forgetting about closing costs as a seller. While these costs are more often thought of as being the buyers’ responsibility, the sellers also have their own costs to pay. This includes items like title insurance, transfer taxes, and escrow fees.
Repairs after the inspection
After the buyer’s inspection is complete, there are often repairs requested to be done before the home sale is finalized. This can range from broken window locks to leaky roofs. The total cost can quickly start to add up and become a burden on the profits.
Cosmetic updates to make it look fresh
In addition to obvious repairs, sellers often need to do some cosmetic updates to a home to make it look inviting for potential buyers. This can include everything from painting walls to adding new cabinet hardware. These updates can help a home sell faster and for a higher price.
Staging costs
Staging a home before selling it is another effective way to get a higher price in a faster timeframe. But it is not free, as hiring someone to stage your home or renting furniture and decor can cost a few hundred dollars. If you have a large home, staging costs can even reach thousands of dollars.
Utilities while on the market
You will also have to continue paying for utilities like water, heat, and electricity while the house is on the market. If you’ve already moved, it can be easy to lose track of how quickly all those monthly utility bills can add up.
Property taxes
Depending on when you sell, you may owe prorated property taxes at closing. These taxes can be a hefty amount, especially if you live in a high-tax area or if the sale happens right before a tax deadline.
Mortgage payoff fees
Selling your home might require you to pay prepayment penalties or additional administrative fees when you pay off your mortgage early. This can be another one of the hidden expenses sellers don’t count on.
Legal or attorney fees
Legal and attorney fees may also be required in some states or situations when selling a home. While it’s not always necessary to hire a lawyer to help walk you through contracts or closing paperwork, it can be a big help if you run into difficulties or misunderstandings.
Moving expenses
Once your home has sold, you will also need to factor in moving expenses. Whether you hire movers or a truck, rent a storage unit, or even just cover gas and take everything in your own car, moving costs can easily run into the thousands.
Home warranty for the buyer
Buyers are often more willing to purchase a home that comes with a home warranty to cover expensive or unforeseen repairs. While a home warranty can be a good way to sell a house faster, it can also cost a few hundred dollars that not every seller has in their budget.
Sources: The following sources were consulted in the preparation of this article.
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