Moving can occasionally be a difficult and emotional process, despite the fact that the thought of new beginnings should make sellers eager for their future chapter.
The inevitable and ostensibly concealed costs of selling a property are contributing factors. Understanding these expenses prior to starting the procedure is crucial for making your journey less stressful. You won’t be caught off guard by any additional costs. Here’s a list of typical seller expenses along with an estimate of how much they will cost you.
- Real Estate Commissions
The highest expense a seller often has to incur is the real estate commission, which typically accounts for 5% to 6% of the transaction price. A percentage of the commission is shared between the agents representing the buyer and the seller.
This cost is often covered by the vendor. You might be able to negotiate a lower commission, though. Real estate agents can be more prepared to accept a smaller fee when it is believed that the property will sell quickly, the local housing market is active, or the property’s price is relatively high.
- Property Repairs
You might be required to pay to have a significant problem corrected before closing if it is discovered during the property inspection. If you foresee problems, be prepared before you sell, because expensive repairs might cost you additional funds.
The buyer can arrange their own property inspection after you and the buyer have both signed the purchase agreement to see whether the house has any underlying problems that could affect its value or safety. There shouldn’t be any costs associated with the examination itself. However, the inspection does leave room for more discussion before closure.
Based on the inspection report’s findings, the buyer can submit demands. A Porch.com analysis found that inspections often save purchasers $14,000. However, the state of your property and your negotiation stance will determine how much the buyers demand and what you must pay to avoid the sale from falling through.
- Pre-Inspections
Normally, pre-inspections cost between $300 and $500. Despite the fact that a pre-inspection could appear to be an unnecessary cost, it might be a wise investment. Potential property buyers frequently withdraw from deals because of unanticipated issues that subsequently surface during an appraisal or home inspection, and delays in sales can be extremely expensive as well as annoying.
If you’ve ever sold a house, you are aware of how stressful the property inspection phase of the process can be. As of February 2022, the NAR reports that house inspection-related problems were the reason for 8% of contract terminations and 11% of contract delays. While most inspection costs are the responsibility of the buyer, the inspection procedure might affect your bottom line.
- Property Staging
Due to the practicalities of maintaining furnishings in a property that they want to leave, many people find it challenging to adequately stage their property without the help of specialists. Making a house appealing to a broad audience also requires a lot of work and expertise. Remember that a quick sale might wind up saving you a great deal of money.
- Capital Gains Tax
Fortunately, capital gains taxes won’t be applicable in the majority of cases. However, just to be sure, you should investigate your personal circumstances. This tax can be due if you reside in a property that has grown in value by more than $250,000 ($500,000 if married, filing jointly), are selling a vacation property or rental property, or have only recently moved into your property.
- Moving Costs
Many people who are relocating opt to pack all of their own possessions, rent a truck, and do all of the transportation themselves. Others choose to hire a moving company so they can concentrate on other duties while the house is being sold. Hiring a moving firm for a local relocation and a move over 100 miles will cost you around $2,300 and $4,300, respectively.
What you need to be done will also affect how much relocating will cost. A full-service relocation will cost more than packing your own boxes and renting a vehicle alone.
- Closing Costs
Closing fees affect more people than simply purchasers. A prorated property tax and a transfer tax can also be charged. Check out the rules in your region because this amount differs by location.
If you want to ensure that your ownership of the property you’re selling is uncontested, you can wind up offsetting the cost of the title search as the seller. This is a typical seller’s concession, despite the fact that the buyer occasionally pays. Usually, it’s between $200 and $400. In order to guarantee that the title is clear, it’s also common for the seller to cover the cost of the buyer’s title insurance.
Based on the lender and the conditions of the purchase agreement, you can even be charged courier fees, escrow fees, or brokerage fees.
- Mortgage Payoff
The proceeds from the sale of your property will be used to pay down your mortgage. However, the amount that appears on your mortgage report is probably a little less than what you currently owe. It is likely that the total amount will need to be increased by prorated accumulated interest. You could also be charged a fee if your mortgage carries a prepayment penalty. If you want to know if this is a part of your mortgage, examine your loan documents or get in touch with your lender.
- Marketing Costs
In the majority of real estate firms, marketing expenses are not included in an agent’s compensation. In light of this, successful marketing initiatives in the present day use both print and digital media. Print marketing can include:
- Signage
- Professional copywriting
- Property brochures
- Magazine and Newspaper advertisements
Digital marketing can include:
- Digital brochures
- Real estate portal listings
- Professional photography
- Social media posts
- Drone footage
While there are several marketing strategies, the agency won’t use all of them. Instead, marketing initiatives will be customized for your particular property, setting, and target audience. In light of this, marketing expenses might range from a few hundred to several thousand dollars.
- Utilities
Even if you plan to vacate your property before selling it, you’ll still need to make a commitment to pay for energy and water. Showing potential buyers a property that isn’t heated, cooled, or lit could be difficult. By examining your current bills, you can determine how much it will cost each month to maintain the utilities until a prospective buyer is found. There are things you can do to reduce your power expenses even though you won’t be living there.
Endnote
It’s easy to get discouraged by all of the possible expenses associated with selling your property. Having said that, keep in mind that many of these expenses can actually increase your property’s resale value and speed up the process of selling it. Not only can a quicker sale reduce stress, but minimizing the amount of time you own two properties, can also help you save money.
The majority of property-selling expenses, like property ownership itself, are, in the end, often prudent investments. If you’re unaware of the fees associated with listing your property for sale, do some research and review some of our advice on how to prepare your property for sale. You can also reach out to us at Sell My Property to buy your land without incurring commission charges or listing fees.