The True Cost of Selling a House: Seller Expenses Breakdown

How Much Does it Cost to Sell a Home?

When considering selling a house, many focus solely on the obvious costs like agent commissions. However, the true expenses extend beyond that initial figure. From staging to closing on a home and everything in between, the financial implications can be significant. Understanding these costs is crucial, but what about the less obvious fees that can catch sellers off guard? These hidden expenses may make all the difference in a seller’s experience.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Main Costs to Know

  • Agent commissions typically range from 5%–6% of the sales price.
  • Staging and prep fees can be 1%–4% of the final sale price.
  • Closing costs (not including commissions) typically range from 2%–5% of the home's sale price.
  • Other costs include repairs, concessions, moving expenses, outstanding mortgage balance, and taxes.

Agent Commissions

How much do real estate agent commissions typically amount to when selling a house? Real estate agent commissions typically range from 5%–6% of the sales price. This commission is split between the listing agent (seller's agent) and the buyer's agent. It’s important to talk about these commissions before hiring a real estate agent.

In addition, the NAR settlement in 2024 has changed some aspects of agent commissions. The buyer’s agent’s compensation is now a clearer point of negotiation—the buyer may pay it, or ask that the seller pay it. If the seller pays it, it can be negotiated to be included in the purchase price, enabling the buyer to pay it as part of their loan instead of upfront.

It's important to note that selling without an agent to save on commission may result in lower sale prices due to a lack of market knowledge and expertise in the process. Real estate agents provide valuable services to sellers, including communication, preparation, marketing, and negotiation. These services are vital in helping sellers maximize the sale price of their homes.

Staging Costs

How Much Does Home Staging Cost?

Staging costs typically range anywhere from $700 to over $2,000 per month, depending on the size of the home. When prepping a house for sale, sellers typically incur staging costs that range from 1% to 4% of the selling price. These staging costs cover essential additions to the home, such as furniture and home decor, as well as the stager’s experience in creating a space that appeals to buyers during home showings. Even the small details will add to the overall appeal of the home to attract potential buyers.

While these costs might seem significant, staging has been shown to lead to higher sales prices and reduce the time a house spends on the market. By enhancing the curb appeal and presentation of the property through professional staging services, sellers can increase their chances of selling the house quicker and at a better price.

Prep Expenses

Prep expenses, such as cleaning, decluttering, and painting services, can have a significant impact on the overall costs of selling a house. On average, homeowners can expect to spend anywhere from $120 to $380 on cleaning services and up to $2,000 on painting costs. Decluttering and organizing services can range from around $250 to $750. While often pricey, these preparations will make the property more appealing to potential buyers. For sellers on a budget, the DIY route is also an option.

Inspections and Repairs

A New Roof Can Help Sell a House Faster and for More Money

During the selling process, sellers commonly allocate funds for pre-sale home inspections to assess any potential issues that may impact the sale of their property. Home inspections typically cost between $280 to $400 and play a crucial role in identifying problems with plumbing, electrical systems, and the roof.

Addressing these issues upfront can prevent surprises during the closing process and enhance the marketability of the home. While the repairs themselves are an additional expense, they enhance the home’s appeal during showings, can lead to a faster home sale, and can have significant ROI. Buyers are more inclined to make offers on homes that are in good condition. In addition, many buyers will negotiate for repair concessions if the repairs haven’t been done.

Sellers often go above and beyond repairs by investing in home improvements with high ROI. This offers many of the same benefits: marketability, appeal, faster sales, and higher prices.

Closing Costs

Closing costs, typically ranging from 2% to 5% of the home's sale price, encompass various expenses such as title insurance, attorney fees, transfer taxes, and escrow charges. Closing costs are split in various ways between the buyer and the seller, and are often a point of negotiation. These costs are essential components of the selling process and can greatly impact the final proceeds received by the seller. Understanding the breakdown of these expenses is vital for sellers looking to maximize their profits.

Agent commissions are not included in the 2%–5%, but are often colloquially lumped in with closing costs.

Typical Seller Closing CostsTypical Buyer Closing Costs
Transfer Taxes Recording Fee
Title-Related Fees Title Search Fee & Title Insurance
Escrow Fees Escrow & Signing
Attorney Fees Attorney Fees
Outstanding Mortgage Balance Home Inspection Fee
Mortgage Prepayment Penalties Home Appraisal Fee
Agent Commissions Loan Origination Fee
Credit Report Fee
Processing/Underwriting Fee
Mortgage Points

Title insurance is a key component of closing costs, providing protection for both the buyer and the lender against any issues with the title of the property. Attorney fees cover the legal aspects of the transaction, ensuring that all documents are in order and the sale is conducted smoothly.

Transfer taxes are levied by the local government for the transfer of the property's title—this varies by state, so selling a home in Ohio, which charges a real estate transfer tax of 0.1%, will be different from selling a home in Delaware, which charges a 4% tax, or Texas, which doesn’t charge a transfer tax at all. Escrow charges cover the escrow agent's services in facilitating the transaction.

Seller concessions can also come into play when negotiating costs. Offering to cover some or all of the buyer's closing costs can make the deal more attractive and help close the sale faster. Ultimately, being well-informed about closing costs and adept at negotiating them can lead to a more profitable selling experience.

Other Associated Costs

Seller concessions, capital gains taxes, moving costs, and home warranty fees all fall under the umbrella of other associated costs when selling a house. These expenses often catch sellers off guard as they can greatly impact the final proceeds from the sale. Understanding and accounting for these additional costs is essential for sellers to make informed decisions and avoid financial surprises during the selling process.

Relocation and Overlap Costs

Relocation and overlap costs include expenses related to moving services, temporary housing, storage, and managing mortgage payments on the old property during the changeover period. Overlap costs in particular can fluctuate depending on the duration it takes to sell the old property and acquire a new one. Proper budgeting for relocation and overlap expenses is essential to avoid unexpected financial strain during the selling process. 

Capital Gains Taxes

Selling a house means you have to consider capital gains taxes, which are levied on the profits generated from the sale of a capital asset such as a property. The tax on the sale of a home is calculated based on the capital gains realized, which is the difference between the sale price and the original purchase price. The capital gains tax rate can vary depending on how long the property was owned before being sold.

Homeowners who've sold their primary residence may be eligible to exclude up to $250,000 of capital gains from taxation, or up to $500,000 for those filing jointly, given they meet specific criteria set by the Internal Revenue Service. Understanding the implications of capital gains tax is important in the domain of personal finance, especially in the context of the housing market.

Consulting with tax professionals can provide sellers with insights into their specific capital gains tax obligations, helping them navigate this aspect of selling a house in a tax-efficient manner. In the United States, the national average capital gains tax rate hovers around 15%–20%, making it a significant factor to take into account when contemplating the sale of a property.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

The Cost of Selling a Home

Grasping the true costs of selling a house is crucial for sellers to make informed decisions and maximize their profits. By considering expenses such as agent commissions, staging fees, inspection costs, and other associated fees, sellers can navigate the selling process with clarity and financial savvy, even if it's their first time selling a home. Collaborating with expert agents can help sellers mitigate these costs and guarantee a smooth and financially beneficial transaction.

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