Unfortunately, selling your home is probably more expensive than you think. There are lots and lots of different costs involved. Some are small but some, like brokers fees which are the largest single item, can subtract tens or even hundreds of thousands of dollars from your sale price. Don’t worry, in order to make sure there are no expensive surprises, we’re going to walk you through all of the costs you may incur when selling your home.
Home Prep Costs
While most homeowners account for the transactional costs (closing, taxes, title, escrow, etc.) of selling, many fail to understand how quickly the costs of preparing their home for sale can add up.
These cost vary from one home to the next and are based on a wide variety of variables (size, age, upkeep, etc). However, at a minimum, most sellers spend thousands of dollars on cleaning, landscaping and paint alone. Let’s take a look at some of the most common expenses and their average costs when it comes to preparing your home for sale.
- Cleaning – is essential. Hiring professionals to do a deep clean before your first showing is a must. And, in order to keep you home looking it’s best, you’ll probably want follow on cleanings before each additional showing.
Cost – roughly $200 – $600 each. - Staging your home – includes more than just furniture and decorating. Depending on the your home’s current state, it may also include decluttering, painting, and minor repairs.
Cost – full vacant-home staging ranges from $2,900 to $5,250, on average. - Landscaping – Your curb appeal is your home’s first impression, so you’ll want to make your exterior looks its best. This might be as simple as mowing the lawn but for most sellers the current state of their front and backyards requires a bit more work.
Cost – roughly $200 – $2000+ - Home improvements. There are two main types of home improvements you can do before listing: 1. updates to repair or replace old systems, and 2. upgrades that add features buyers love in order to increase your sales price. Sometimes, the improvements needed will be minimal. It might just require a new coat of paint. However, some sellers might find that they need to replace the entire roof. You could sell the home as it is, but this often means receiving a much lower price.
Cost – roughly $4,000+
Other expenses can include professional photos, video, and marketing costs. Don’t forget to factor in moving costs ($2,000+ for a 4 bedroom), utilities while the house is on the market, and temporary housing you might need when selling.
You may also find it advantageous to get a pre-inspection ($300-$700) done before putting your home on the market . The pre-inspection will uncover any issues your home has before listing so that you can address them before your home hits the market. It’s an upfront cost, but we highly encourage all sellers to do this as it may even increase buyer confidence which could lead to more and higher offers.
Concessions Could Cost You
The most common concessions are post-inspection repairs, a home warranty for the buyer, and credits toward closing costs. Today, most buyers try to work these into the initial agreement as added buyer protection. For more information, check out inspection contingency explained.
Closing Costs
Closing costs include agent commissions, prorated property tax, transfer tax, escrow fees, utilities, title insurance and more. These costs vary from one home sale to the next but average between 8% to 10% of the home’s sales price. With the national median home value being roughly $400,000, that means the average seller spends between $34,000 to $40,000 on closing costs alone.
Total Cost – Time to Add!
Sellers are always surprised to see the total cost of selling their home compared to the sales price and even more shocked by how little they are left with when those costs are subtracted from their equity. To illustrate this, let’s add up all the costs above when selling a home with the national median price of $400,000.
- Cleaning – $200 to $600
- Staging – $2,900 to $5,250
- Landscaping – $200 – $2000
- Home Improvement – $4,000+
- Concessions – unknown
- Pre-inspection $300 to $700
- Moving $2,000+
- Closing costs $34,000 to $40,000
Total cost – somewhere between $43,600 to $54,550+
That means, for the median $400,000 home, it costs 10.90% to 13.63%+ of the homes sale price, at a minimum, just to sell!
This get’s even scarier when you factor in cost as a percentage of equity. Most sellers don’t own their home outright. They have a mortgage and that loan has to be re-paid to the bank when the home is sold. Using the costs above, let’s assume our seller has 50% equity in their home at the time of sale. In this case, the seller still owes the bank $200,000 of the $400,000 sales price, allowing them to only keep $200,000 after the home is sold. Now, when we factor in the cost of sale, $43,600 to $54,550+, compared to the seller’s equity, $200,000, the percentage of cost is between 21.80% to 27.27%+ of what the seller is paid and actually gets to keep.
It’s worth repeating: when selling, it could cost you 21.80% to 27.27% of what you are paid and actually get to keep!
Cost Cutting
For most costs associated with selling your home, there’s nothing you can do. Some are required during the closing process and some actually improve your property value and sales price. However, there is one, that is blindingly obvious and astronomically large and, if cut, can immediately save you roughly 6%. The agent commission. For more information, check out our guide to a better way to sell.
Still sell, but Know What to Expect
Don’t worry, depending on how long you’ve owned it, you will most likely still make a ton of money when selling your home. However, before you do, you need to know exactly what you’re signing up for from a cost perspective and set your expectations accordingly. If you don’t take the time to itemize, add, and reduce you run the risk of being shocked, appalled and/or disappointed after closing.
