Selling a home seems like a quick way to get extra cash – and possibly reap the positive return on your investment, especially in a hot seller’s market. A quick glance at local real estate listings can help you see a best-case scenario of what you could get for the home; on paper, that might look great, but there’s no guarantee you’re going to see all of that money.
In reality, selling your home conventionally is associated with a variety of different costs, some of which are obvious, but some of which are harder to predict.
So what are the real costs of selling your home? And are they worth it?
The Costs of Selling a Home
In most cases, you’re going to face a variety of costs when selling your home, including:
- Commissions and fees. If you want your home to sell as quickly as possible and for as much money as possible on the open market, it’s a good idea to hire a real estate agent. However, real estate agents don’t work for free. If you hire an agent, you’ll owe them a commission – usually something like 5 to 6 percent of the purchase price of the home. You might owe other fees as well, such as the cost of brokerage service. Even if you choose to forgo hiring a selling real estate agent to help you with the transaction, you’ll still be working with buyers who are working with buying agents of their own – and the seller is responsible for their commission fees.
- Repairs and renovations. Your home may not be in selling condition. If you try to list the property and buyers don’t like what they see, they’re not going to make any offers on your home. That’s why many homeowners ultimately need to make tends of thousands of dollars of repairs before even listing the home. Additionally, if your home buyer inspects the home and finds issues with it, they may request you to repair those before finalizing the transaction – or else lower the purchase price of the home accordingly. If your home needs a major repair, like one affecting the structural integrity of the house or an electrical or plumbing rework, it can cost you thousands of dollars – cutting deeply into the profits you might otherwise have made.
- Marketing. If you hire a real estate agent, they’ll likely take care of the marketing and advertising side of things, and your commission will cover those expenses. But if you’re listing the property on your own, you’ll need to invest heavily in your own marketing and advertising. That means paying to get your home featured in various publications, promoting the home with signs, as well as planning and hosting showings.
- Staging and photography. Don’t forget, if you want to sell your home quickly and for the highest possible price, it needs to look its absolute best. That means you’re likely going to need help properly cleaning, staging, and photographing the home. After all, most homeowners look at photos of the homes that interest them long before they choose to see the home in person. Staging the home professionally can cost hundreds to thousands of dollars, as can the photography necessary to show your home off in the best possible light.
- Holding costs. If your home doesn’t sell right away, or if it takes too much time for the financing to close, you could be responsible for holding the property until the sale is finalized – or until you can find the right buyer. That often means continuing to pay your mortgage (even if you’re not living in the property) or continuing to keep your home listed in marketing and advertising channels. Either way, you’ll lose money every week that your home sale isn’t finalized.
- Closing costs. The closing costs of the home are often negotiated between the buyer and seller. There are some fees that the buyer typically handles and some fees that the seller typically handles, with additional costs that could be paid by either the buyer or the seller. Depending on the deal you negotiate, you could end up being responsible for thousands of dollars of additional closing costs – including things like escrow and closing fees, attorney fees, remaining HOA fees, and prorated property taxes. Your real estate agent may also advise you to pay an additional credit toward closing costs to make the deal more attractive to buyers.
What’s the Alternative?
The additional costs of selling a home can run into the thousands, or even tens of thousands of dollars. So is there any alternative? In some cases, it may be advantageous to sell your home all in cash, bypassing many of the fees and requirements in this guide. However, there are going to be pros and cons to any decision you make. The more informed you are about the situation, the better your decision on the matter is going to be. Before making a final decision, make sure you understand all the variables involved.
