Selling a house comes with a number of expenses that could be surprisingly hefty if you don’t pay much attention to them. Unfortunately, it’s one of the major problems faced by many sellers. Because they often get overly ecstatic about the money they’re going to make, they overlook the costs associated with home-selling.
If you don’t want to experience the same thing, you need to understand that selling your home is a significant financial decision. Thus, we’re highlighting the potential costs of home-selling and some tips to maximize your home sale profit below.
Costs To Prepare Your Home
The first costs you’ll most likely have to face is making your home ready to sell. Although the preparations may vary based on your property’s overall condition, you can generally expect to pay up for the following expenses to some extent.
Home Improvements: Making improvements can boost your home’s value and the odds of a fast sale. But some may turn out to be a waste of time and money in the end. That’s why it’s essential to learn which ones are more likely to pay off than others. But among the home improvement projects, kitchens and baths usually carry the highest return.
Getting professional staging can also be a great way to increase your home’s value and make it more marketable. But on average, it might cost you $1,100. Note that you don’t necessarily have to spend a lot on home improvements if you have limited time and budget. Presenting your house as clean and cozy can already make a difference.
Home Repairs: There might be necessary repairs that you’ll have to make before putting your house in the market, such as broken doors, chipped paint, or holes in the wall. Remember that plumbing and other water-related repairs need to be done as soon as you become aware of them. Potential buyers will immediately signal trouble when they smell something musty.
Repair costs will largely depend on the extent of repairs. Still, it’s typical to expect at least a few hundred dollars in minor issues, even if the property is in good operating condition. But if you don’t want to deal with any of these, you can opt to sell your house as-is.
There are other costs associated with preparing your home to sell. Nevertheless, it’s likely worth it to get the services of a professional, especially if you’re looking to make a sale quickly.
Closing Costs of Home-Selling
After closing the real estate transaction, there are fees that both buyers and sellers have to pay. Although the buyer generally pays more, there is still a handful that falls on the seller’s shoulders, which may take a big chunk of the sale proceeds. Below are some of the closing costs that you might be required to cover as a seller.
Real Estate Agent Commissions: If you decide to work with a real estate agent, you’re most likely expected to pay them 5% to 6% of the sale price. You can negotiate their fees, but it’s too late if you do it around the closing table when you have a big check in hand.
Taxes: You may have to pay capital gains tax if your home has appreciated a lot. But typically, you won’t have to pay if you earn not more than $250,000 on your home sale or less than $500,00 if you’re married and file jointly.
Title Insurance Policy: It’s customary for the seller to pay the costs of the policy issued to a new homeowner, but it may differ from state to state. Even so, it’s calculated based on the purchase price.
Other fees might be included in the closing costs, and you can expect them to be around 1% to 7% of your sale proceeds. But typically, sellers pay anywhere from 1% to 5% of the sale price.
How To Maximize Your Profit On A Home Sale?
The total costs associated with selling your home typically range from 10-16% of the sale price. That’s pretty much a considerable amount to lose from your home sale. Fortunately, there are different ways to lower these costs as much as you can.
Here are a few things you can do to maximize your home sale profit.
Look for a flat-rate real estate agent.
Do the minor home repairs yourself.
Don’t be afraid to negotiate fees.
Be familiar with tax benefits.
Consider selling your home to off-market buyers.
Make The Most Out Of Your Home Sale
Knowing how the costs of selling a home add up is a good starting point to make the most out of your home sale. But bear in mind that other factors may come into play, such as the timeline of selling, the market’s condition, and your selling method. You have to weigh every possible alternative and choose what you think is best for your goal and situation.