Guest Blogger #971, Entry #2463, May 26, 2013
Since most people have to buy a home before they can sell one, chances are good that you are already aware of the various fees and other expenses association with purchasing property. Aside from the obvious price tag attached to the house you’ll need money for the down payment and you’ll have to pay fees for some or all of the following: a home appraisal and/or inspection, origination (to the lender for creating the loan documents), points (to buy down your interest rate), escrow fees, closing costs, and so on. Yes, there are a lot of hands out when you decide to buy a home. What you might not anticipate, however, is that you also face a slew of fees and expenses when you go to sell your property. So here’s what you can expect to fork over in the way of costs when you put your home on the market.
Image via: John Kraemer & Sons
Commission to your Relator:
The main cost associated with selling your home is the commission you’ll pay your realtor upon the completion of the sale. Generally, this cost is about 5-6% of the total amount of the sale, regardless of how much you actually gain. So if you sold a home for, say 200,000, you should expect to pay your realtor $10,000-12,000 for the transaction right off the bat. You will almost certainly want to find out what percentage your realtor charges in case you want to scout for better rates elsewhere. Just keep in mind that half of this cost often goes to the buyer’s real estate agent, so if your realtor quotes you a rate of 3%, make sure that this is the total amount rather than just his cut. And don’t forget, if you opt for a “for sale by owner” scenario the buying agent may still expect to earn a percentage of the sale even though you don’t have your own realtor to pay. Of course, you might also look for an agent that charges a flat fee for this transaction rather than a percentage, but you could find yourself stuck doing some of the work of selling on your own in this scenario.
Image via: Sutton Suzuki Architects
Secondary costs that can be forgotten:
Before you sell there may also be other costs associated with preparing your home to be listed. For example, you might want to bring in a home inspector to give you a full report on your property so that you know about any major issues going into the sale. This could give you the opportunity to address problems that the lender’s inspector would otherwise uncover, potentially tanking a sale. You might also have to pay for mold, termite, or other specific inspections before you can sell your home, depending on the requirements of your state of residence. Many homeowners also beef up their insurance for a short period of time while their home is listed since so many people will be wandering around the property for viewings. And you might want to hire an attorney to make sure that all of the legal aspects of your sale are in order.
After the sale you may face all manner of expenses, as well, mainly in the way of taxes. Of course, you’ll have significantly less fees as a seller than you did as a buyer, and you won’t have to finagle the best rates using info from sites like RateSupermarket Inc. but you could end up paying out more overall thanks to the realtors’ commission. But so long as you’re prepared for these costs and you know your options you can price your home accordingly and calculate what you’re likely to walk away with after the sale of your home.
For more home buying & selling tips on Stagetecture, click here.