Are you looking to sell your real estate property, and are you wondering whether your asking price and the final home sales price will offset your spending? Do you need to find out the total costs of selling a home in the current real estate market?
If so, you’ve come to the right place. Here, we will discuss the commission fees of realtors, the costs of renovating homes for sale, and closing costs for single-family homes. Check out the information below to learn about what homeowners spend when selling houses.
What Are The Costs of Selling a Home
The seller’s market may be favorable right now for homeowners instead of homebuyers, but don’t forget that there are still many costs associated with selling property in the housing market. One of the significant costs is the commission fees of your real estate agent. These fees are usually 5 or 6 percent of the final home prices.
In addition, you will need to set aside 2 to 4 percent of the agreed-upon final list price to cover transfer taxes, real estate attorney fees, and more.
For example, if you sell your home for $300,000 and your realtor fees are 5 percent of the cost, then you will have to pay your realtor $15,000 once the new home sale is finalized. You may decide to sell a home without a realtor, but you’ll find that the final housing prices from first-time buyers are usually lower among for sale by owner (FSBO) houses.
You will also need to cover closing costs when selling a house, which usually include:
- Property taxes
- Transfer taxes
- HOA fees
- Title insurance costs
Some other costs may include a brokerage fee, a courier fee, and escrow costs. Furthermore, home values are much higher when you’ve conducted all repairs and renovations. As such, you’ll need to cover the costs of fixing up a house.
At the same time, cash buyers tend to prefer homes with greater affordability and will buy houses in need of renovations. The amount you spend on remodeling your home will depend on the housing demand in your area.
Different Types of Home Selling Costs
Along with the costs previously outlined, some buyers may request consumer protection coverage for certain home appliances. Also, if you move out before your home sale is finalized, you’ll still need to continue paying for utilities. As such, you will have to cover the costs of heat, electricity, air conditioning, and more until the buyer completes the sale.
Furthermore, you must be ready to get rid of your mortgage rates and interest rates. However, you will have to pay off your mortgage upon the final sale of the home. Even if you have low-interest rates, it’ll feel great to pay off that mortgage and no longer have that debt over your head.
Sometimes, there is a prepayment penalty fee associated with the payoff. Ask your lender if that condition is part of your loan.
You will also need to consider the taxes associated with real estate sales, such as:
- The capital gains tax
- The property tax
- The transfer tax
If you sell your home for more than you bought it, you need to report the extra you make on your federal tax return and pay a capital gains tax. However, married couples filing jointly on their taxes can exclude as much as $500,000 in profit from their taxes. Single homeowners can exclude up to $250,000 in profit.
Sellers will also need to cover a prorated share of the property tax fees up until the closing date. In some regions of the country, you will also need to pay real estate transfer taxes charged by local governments after a home sale.
You should also consider current housing market trends and whether you can sell your home for a high profit. Take a look at the number of homes for sale in your neighborhood and how long each sale takes. How many houses were sold in the last year? These factors matter for how much profit you’ll make to cover the cost of selling a home.
Currently, home prices are at record highs around the country, but the real estate market has been slowing down in recent months. As such, it’s the perfect time to sell before a significant drop in home values occurs.
How Can You Reduce the Costs of Selling a Home?
You may think that selling your home by yourself without a realtor can help you save costs. However, having a qualified and experienced realtor can help you reduce the costs of marketing your real estate property yourself.
You should also consider avoiding over-improving your home before the sale. If you make the house look better than the rest of the properties in your neighborhood, you won’t gain more upon the sale based on the average prices in your location.
As such, make more minor repairs and renovations like adding a fresh coat of paint and landscaping work to boost the curb appeal. That way, you can lower the cost to fix up a house to sell.
When seeking contractors to renovate some parts of your house or hire a photographer and real estate agent, make sure to comparison shop and find those with affordable services. In addition, take a close look at your sales contract and negotiate minor concessions that the buyer may have requested.
Lastly, complete as many projects as you can by yourself. For instance, avoid getting staging professionals and cleaning services since you can complete these responsibilities yourself.
Can You Save Money Selling a Home in 2022?
In 2022, the housing market has been favorable for sellers. As such, you can use the housing market to benefit you. For instance, you can negotiate with your real estate agent to pay lower commission fees. You can also ask for discounts from contractors, photographers, and real estate attorneys.
You should also interview multiple real estate agents before picking the one for you. Realtors may have different rates, and some are more in favor of negotiating prices. Furthermore, you can cut realtor costs if you decide to forego some of the services the real estate agent provides.
You should also DIY home repairs to save money as well. For instance, painting and landscape work are relatively simple, and nearly all home sellers can complete these projects themselves.
Also, price your home at the right amount, and you will sell it much more quickly. That way, you won’t need to continue paying off your mortgage and interest rates for nearly as long.
Lastly, you can try selling your home as-is to avoid spending any money on home repairs and renovations. You will find that cash buyers and real estate investors are willing to purchase homes in their as-is conditions.
The details above should have provided you with everything you need to know about the costs of selling a home in 2022. You will need to cover the costs of real estate agent commissions, capital gains taxes, property taxes, paying off your mortgage, and any home repairs.
You can save on costs by negotiating with realtors, comparison shopping, and avoiding over-improving your home. You can even sell your place as-is.
If you want to cut the costs of remodeling and sell a house fast in Florida, you should consider selling your property to Orlando cash home buyers. We buy houses Clearwater owners are trying to sell, as well as in other parts of Florida, so contact us today!