While it’s true you will reap the benefits of the equity the property has built, most homeowners don’t realize that selling a house comes with its share of fees. The costs can go up to almost 10 percent of the sales price. So if your home sells for $250,000, you may have to spend up to $25,000 in fees, closing costs and commissions. While most of these costs are optional (and we will discuss how you can avoid them), below are a few expenses that you should factor in when selling your home.
If you are hiring a real estate agent to represent you, you will pay the commission to not only your agent, but also that of the buyer (unless otherwise negotiated). The standard commission for real estate agents – involved in a home deal – is six percent of the sales price. So for a home that sells for $250,000, the agent commission will amount to $15,000.
This exorbitant cost is exactly why the trend of ‘For Sale by Owner (FSBO)’ is becoming so popular. If you list your home as FSBO, you won’t hire a real estate agent, but the list the property as FSBO. You can hire their services on a ‘le-carte’ basis, which means that you will pay an agent only for specific services such as listing your home in the MLS and holding an open house.
Prepping the house for sale
If you are selling your home in the traditional way, you will stage the property for showings. A 2015 National Association of Realtors study revealed that the median cost for staging was $675.
In order to impress the buyers, you will make repairs, buy new appliances and fixtures for décor, and invest some money in decluttering your home and improving the curb appeal.
Apart from making cosmetic repairs such as wall paint, you may also have to fix structural defects. For example if the roof is leaking, it will cost you thousands of dollars to fix it. If the buyer has written a home inspection contingency into the purchase contract, the home inspection may come up with defects that you were not even aware of. The buyer may either request a ‘repair credit’ or ask you to fix the defects before the closing.
The average number of days a home stays on the market if you are selling it in the traditional way is almost 2-3 months, according to studies. If you have moved out of the property to make showings convenient to potential buyers, you will have to bear carrying costs such as utilities, home warranty and insurances. If you own a condo, you will most likely pay the homeowners association (HOA) fee even if it’s unoccupied. On top of that, most home stagers charge a monthly fee to keep the house clean and staged. So you will keep paying your stager until the property gets sold.
Closing costs can be up to four percent of the sales prices. They include (but are not limited to):
Most of these closing costs are negotiable. You can ask the buyer to pay for some of these, depending on the competition in the real estate market in your area.
Additionally, you will have to spend some money on moving to a new home.
How to avoid these costs
First of all, you can list the property as FSBO to avoid paying any commission to a real estate agent. Be prepared to handle negotiations on your own. You can also sell your home ‘as-is’ to an investor!
While you may have to price your home competitively, you won’t need to spend money on staging, repairs and renovations. It usually balances out. In order to avoid carrying costs and many of the closing costs associated with selling a home to someone who is relying on a mortgage, you can easily find a cash buyer. The cash buyer will close the deal within a few days because his or her offer is not contingent upon financing.
E2F Properties is Westchester County’s premier real estate redevelopment company. We would love to help you sell your home anywhere within Westchester. If you have a home that you need to sell or if you know of a property in your neighborhood that you think needs renovation, please call us to discuss your options! We are a solutions company and are available to help! (914) 999-2293