Common Expenses to Budget for When Selling Your House
When you decide to sell your house, you may start thinking about the potential profits you might get to add to your piggy bank. That is exciting, however our advice is to make sure that you also set some money aside before the sale. Why? Because, even though you may make a nice profit in the end from selling your house, there are other costs that you may need to pay upfront or at closing to seal the deal. There are some obvious costs you’ve probably anticipated, like commissions to the listing and buyer’s agents (typically 5% to 6% of the final sales price). But there are also other expenses to consider.
If you have occupied your house for some time and haven’t kept up with routine maintenance, you may need to hire a handyman or a general contractor (depending on the nature of the work), to take care of any necessary maintenance or repairs. It’s important to do this before putting the house on the market, so you don’t turn a buyer off during the home inspection. To get started, walk through your house and note any issues that may need to be fixed (i.e. rotting wood, a leaky pipe, stains from water damage, etc.). Depending on the condition of your house, these expenses can range from hundreds to the thousands of dollars. If you are a talented DIYer, then you can decide which things you can do yourself to save money. When it comes to certain major repairs (like replacing the roof), it might make sense to hire a professional or just reflect the repair costs in the listing price.
Once repairs are completed, or you’re lucky enough to not need many repairs, you should next focus on “staging” to make your house as appealing as possible. This may involve decluttering rooms, and putting some things out to the curb or in storage. We wrote an article that has some great tips to stage your house for sale. When interviewing agents, ask if they offer free home staging or are a certified home stager themselves. You may opt to hire your own stager which can range in cost from $500 to $5,000 depending on many factors.
Something important to consider when selling your house is marketing. If you are using a realtor, the cost to market the property will be included in his/her commission. It’s a good idea to ask the agent up front what their plan is for marketing your house. If you choose to sell on your own, you will need to pay the cost to list your house on the Multiple Listing Service (MLS). We recommend finding a third-party site to get your house on the MLS. Don’t forget the time and cost it takes to list the house on classifieds and other real estate websites. This could add up to a few hundred or even thousands of dollars depending on what sites you are using. The next thing to consider is professional photography. Having professional photos taken is a fantastic way to showcase your house and get buyers excited before the open house or showing. You may want to pay an up-charge to your realtor or other professional for high end photos, drones or videos, if that is determined to be best to market your property. When it comes to marketing, there are plenty of things that can drive expenses up. The good news is if you know these things ahead of time you can prepare upfront. Having a pre-defined Marketing Plan is a major reason why home sellers choose to work with a real estate agent. The key is getting matched with the right one. Agents who are certified by AdvantageU Home Sellers’ Resource have top notch marketing plans that get homes sold fast.
Did reading that make you think of the popular song by Semisonic? “Closing Time.” Every new beginning comes from some other beginning’s end…sorry got a little sidetracked there! Anyway, let’s discuss the costs you may incur at closing. After receiving an offer, sometimes the contract is contingent on the seller fixing things around the house before the sale is final – you know the things you may have missed when making repairs in the beginning. Depending on what the buyer wants fixed, it could be a minimal cost, or much more expensive if it’s something like getting the roof replaced or having a costly pest remediation. Typical closing expenses for home sellers include the abstract and title search, instrument survey, real estate commissions, and transfer taxes which also are known as revenue stamps. We went through a ton of information here but don’t let it overwhelm you. It’s great that you are doing this research upfront because it will save you time and money in the end. If you are in the market to sell soon, we recommend downloading our Ultimate Home Sellers’ Checklist. This powerful resource will guide you through the various steps of selling your house and avoid costly mistakes. It is designed to organize the home selling process for you so that you can be confident without missing a single step. Also, don’t forget to visit the AdvantageU resource page regularly to get the latest home selling tips!