Selling a home is often a life changing decision that most adults have to encounter at least once in their lifetimes. Sometimes this decision can be stressful for a number of reasons – which include: figuring out the next step, where will you move after selling the home, is the price the home is being sold for enough to help in the transitioning process, and last but not least the expenses involved with selling the property.
Be sure to account for these expenses as you get ready to sell, as they will likely eat up a significant amount of any profit you may make on your home sale. If most people had it their way, if they could sell their property for the price they want without incurring any major expense during that process they would. We are going to break down a few of the major costs that you should be prepared to pay if you are in the market to sell your property.
HOME REPAIRS & UPDATES COSTS
According the HOMEADVISORS, the national average cost of home repairs is $10,350. Most sellers typically need to perform the following updates to get the home retail ready: interior painting, carpet cleaning, house cleaning, and landscaping). You may also have to pay handy men to do small repairs and refinishing to cover up nail holes, fix loose tile and plasters which may run you around $100-$300 per project.
Updating the lighting fixtures is also another costs that can become costly because there may be so many rooms in the home. According to FIXR, Updating lighting fixtures may cost you from $200-$700 depending on the number of rooms. Cleaning service costs to remove dusts, and wipe down interior walls, ceiling fans, etc. averages out to around $900.
Then of course to really get max dollars on your property you may also need to update the kitchen and bathrooms. According to HOMEADVISORS on average, it costs $22,369 to remodel a kitchen with homeowners spending on average $12,558 and $33,675. These costs vary depending on kitchen size, quality of materials, and whether the layout of the room is being changed.
Something else that you will need to pay attention to is whether or not your repair will be major repair or minor repair. Some major repairs include: roof updates (which can cost you up to $7,000), electrical, plumbing repairs etc. which also may require city permits to even get done (which require weeks sometimes months just for approval). Minor repairs are updates which can be done with basic knowledge, and some basic tools which you may have lying around the house.
HOME STAGING COSTS
Typically when you want to sell your property fast after the renovation process – you will need to hire the services of a professional home stager. Homes which are professionally staged usually sell for more than 3% of list price and according to MortgageReports.com sell 73% faster than non-staged homes. Home staging will usually include props, furniture, flowers, re-arranging home to a visually pleasant manner, window dressings and lighting fixtures. These costs will vary depending on the type of property, size of the house, the holding period for the staging materials and how much of the house will need to be staged.
MyMortgageInsider breaks down the several types of home staging which include:
- Vacant Home Staging: it will cost around $2000-$6000 depending on the square footage of the property + the cost of renting the staging materials per month for the duration of the sale.
- Occupied Home Staging: This form of staging will typically be less expensive, the home stager will charge a one-time fee of up to $800. The stager will typically declutter, and re-arrange the home owner’s personal belongings in a much more visually appealing way, put up art-work, and re-arrange furnishing.
- Staging Main Rooms: Many times to save money – you may want to stage just the main areas of the house: kitchen, family room, living room, master bedroom, and dining room. For a 12x12 house, to stage 1-2 rooms it will cost around $400-$700 (This in my opinion is the most cost efficient method of staging).
The home stager will also usually charge you an initial consultation fee which usually costs anywhere from $150-$600 – (which will come in the form of a flat rate or a per hour fee). Home Staging on average costs around 1-3% of the listing price according to FIXR.com + around $2000+ / month for staging material rental. As you can see these costs will add up and although it may be worth it, the home staging costs can add up significantly.
Seller Contributions (also sometimes called Seller Concessions / Interested Party Contributions) is a formal agreement between the seller and buyer to have the seller pay a portion or all of the buyer’s closing costs. Because the market is hot, sometimes to attract more buyers you may want to offer these as a term in your marketing and sale.
There are limitations to this assistance such as not being able to offer more than what the buyer’s actual closing costs are (or being able to offer a concession that is worth more in value than the actual appraised value of the loan).
When selling your house – offering a home warranty can also be a great marketing tool to attract more buyers to your listing. It offers buyers a great incentive to buy your home as well as a little peace of mind after the sale. The purpose of a general home warranty is to cover expenses that insurance may not cover which typically include: built-in appliances, plumbing and electrical systems and hvac. According to ANGIESLIST, the general cost of most home warranties is from $300-$500 and last up to a year long.
Closing casts are fees that are paid to 3rd party entities which help to facilitate the sale of a real estate transaction. Closing Costs for a seller in the United States vary from state to state, but on average will be anywhere from 6%-10% of the final purchase price of the property. These costs include a real estate agent commission which is usually 6% of the sales price + an additional 4% in miscellaneous closing costs.
The transfer taxes, which are taxes imposed by the local state government for the transfer of title from one owner to another – these vary from one state to another (in Georgia they are $1 for every $1000 and at the rate of 10 cents for each additional $100 or fractional part of $100).
Long term capital gains taxes are charges on a property which you have held on to for more than a year. These taxes range anywhere from 0%-20% based on your income bracket. If you are in the 10-15% tax bracket your capital gains tax is 0%, if you’re in the 25%-35% tax bracket your capital gains tax is 15%, and if you’re in the 39.6% tax bracket your capital gains tax is 20%.
Your loan payoff (if you have a mortgage) is also another cost which must be accounted for. Sometimes if you don’t have any equity (difference between the appraised value and mortgage payoff) built up in your property then you may even have to come to the closing table with cash to payoff your loan.
You will also have to pay your closing attorneys / title companies various closing fees associated with performing the closing as well as their title transfer fees – these fees vary from office to office but a good rule of thumb will be around 1% of the sales price.
Some other costs to be aware of also include title insurance fees, any unpaid home owner association fees, any liens or judgements on your property, pro-rated taxes, termite inspection and remediation and a credit for repairs if there are any issues found in the inspection.
This is often a forgotten cost for a lot of property owners, and this cost if you want to hire a professional will cost you up to $1000. The American Moving and Storage Assocation states that the average cost for a local household move is around $2300, and for long distance movers $4300.
As you can see these costs can add up pretty quickly, so if you are considering selling your property the traditional route these are all costs that you want to be aware of heading into that process. If you would like to forego these costs and have a buyer who is ready to pay your closing costs then click the button below.