Experts estimate that most people who use a real estate agent will pay up to 10% of their sales price in costs associated with the sale. The cost of selling a home yourself can range from 4% to 8% of the selling price of your home. When you’re estimating your expected earnings, remember that the cost of selling a home can be deducted from that figure for tax purposes.
To give you an idea of what the costs of selling a home are in the current market, take a look at the following information. We’ve included estimated costs based on selling a $250,000 home, as well as some tips for reducing or eliminating them to reduce the overall cost of selling your home.
Sales commission
If you list your home with a real estate agent, expect to pay 4 to 6% of the sale price, or $8,000 to $12,000 in real estate commission.
Tip: Compare prices. Real estate commissions are not written in stone. A real estate agent may be willing to accept a lower commission in a slow market, or may save money by hiring a real estate agent only for specific services rather than a contracted listing.
250,000
-12,000
238,000
closing costs
Taxes, both transfer taxes and property taxes, and legal fees associated with the closing and completion of the sale of your home will be 2% to 4% of the sale price, or $4,000 to $8,000.
Tip: Check the laws in your state. If you have prepaid your property taxes for the year, you may be able to get a credit instead of a bill. There may also be other reimbursements for prepaid escrow costs for home insurance and other costs of selling a home.
238,000
– 8,000
230,000
pay off your mortgage
Whatever principal balance remains on your current mortgage will have to be paid off at the time of the sale of your home. To keep things simple, let’s say you still owe $50,000 on your current mortgage. If there is a prepayment penalty, you will also need to deduct it from your final sale price.
Tip: Ask your lender to prepare a settlement statement for you to check your numbers. If a service fee is charged, you can deduct it as one of the costs of selling a home.
230,000
50,000
180,000
Repairs to your home
The cost varies widely depending on the age of your home and how well it has been maintained. At a minimum, you should get a home inspection to identify any potential problems and avoid being caught out at closing. You should plan to pay around $300 for a home inspection.
180,000
300
179,700
Presale facial rejuvenation
Again, the cost varies depending on the work that is needed to make the house look its best. Conservative estimate: $300 for paint, new hardware and screws, carpet for living room floor, and lawn service
179,700
400
179,300
moving costs
The cost of moving from one house to another is included in the cost of selling a house. It can be as little as $1000 up to $12,000 for a cross-country move. Let’s be conservative again – $3,000
179,300
3,000
176,300
Other relocation costs
You may need to replace appliances, pay for school transfer or gym fees, or pay for storage of your furniture. There are many unexpected costs of selling a home that can be nothing or add up to a big chunk of change.
Even without adding other relocation costs, you can see how the cost of selling a home can reduce your final cash profit. The good news is that most of those costs are tax deductible.