Thinking about selling your home? It’s pretty straight forward right? Pay some commission fees and pocket the rest? If it were really that simple, but it isn’t. The average cost to sell a house is typically up to 10% of the sale price. This means if you sell your house for $150,000, you can anticipate subtracting $15,000 from the profit of the sale. That’s a number you want to be prepared for, so before you put a for sale sign on the front lawn, let’s look at what makes up those expenses.
Seller Concessions: A seller concession means you’ve agreed to pay some of the closing costs on behalf of the buyer. The buyer’s inspection fee or title insurance are examples of costs you might offer to cover to sweeten the deal. Concessions limits may vary due to loan type.
Closing Costs: Closing costs are fees paid by both the seller and buyer to cover the costs of the home sale transaction. A seller’s closing costs usually include their portion of the closing fee, transfer taxes, an attorney’s fee, recording fees and any accrued property taxes.
Mortgage Satisfaction: If you still owe on your current mortgage, you will need to pay it off when you sell your home. You must use the proceeds from the sale to pay off the original loan. Be sure to check with your loan servicer whether there is a prepayment penalty, which is a fee for paying off the loan early.
Capital Gains Tax: The tax you pay on the profit you make from selling real estate is called capital gains tax. Instances can vary greatly, but there are ways to minimize or even dismiss capital gains tax expenses. Consulting a tax professional on this topic will be to your benefit.
Home Repairs: Most home buyers order a home inspection to check the property’s condition before signing on the dotted line. Damages or items in need of repair may result in additional expenses before the buyer will agree to the sale. If not fixed, the buyer may ask for concessions over a major repair, which will lower the sale price of your home.