Contrary to popular belief, not all home owners smile all the way to the bank after selling their homes. The actual return doesn’t match the expected return in most cases. Many of these costs can easily consume a significant percentage of your anticipated profits forcing you to look for funds. To avoid such instances, you must be fully aware of all the costs incurred when selling a home. Below are some of the main costs you should expect to incur when you sell your home.
Expenses incurred when selling a house
1. Repairs/upgrade costs: These are by far the most important costs to consider when selling a home. Although most home owners anticipate repair costs before selling their homes, they don’t consider the fact that the costs can easily get out of hand if they aren’t monitored closely. Some of the most common repair/upgrade costs incurred before a house is sold include; painting, remodeling/fix-up, house washing and landscaping costs.
These costs are inevitable because they improve the appearance of your house significantly which in turn increases the value. Repair/upgrade costs can range from a few hundred dollars to thousands or millions depending on factors such as the size of the house, extent of damage, type of upgrades, location etc.
2. Staging costs: This is one of the most commonly overlooked expenses by home sellers. Professional staging is not required however it is advisable to make your home look perfect. Home staging companies are highly experienced and knowledgeable in making homes appeal to potential home buyers.
A home staging company will use their own furniture to make your home look perfect. According to numerous research studies, staged homes fetch more money. A professional home staging company will charge a few thousand dollars or less if they consider using some of your furniture/decor.
3. Pre-inspection costs: In many cases, you will be required to hire a professional to inspect your house for pest damage or other structural issues. Such costs are necessary since they prove to potential buyers that you are selling a structurally sound house. Pre-inspection costs range from $100 upwards depending on the kind and number of inspections done.
4. Lighting and heating costs: Contrary to popular belief, vacant houses usually incur lighting and heating costs. You should expect to pay slightly higher utility bills if you want to make your home perfectly habitable when showcasing it to potential buyers.
5. Extra homeowners insurance cost: It is important to note that most homeowners’ insurance doesn’t cover vacant homes. Many home sellers are therefore forced to purchase extra homeowners insurance for the entire vacancy period. Since most homes take a few months to sell, you may incur an extra cost which is typically a few hundred dollars or more if your house is above average with expensive fittings, decor etc.
6. Real estate agent fees/commissions: To be able to sell your home fast and professionally, you will need to hire a real estate agent. In most cases that fee will be 6 percent of the sales price. Real Estate commissions are always negotiable; however agent fees can take a chunk out of your net profit.
7. Transfer tax: You may be required to pay transfer tax when you sell your home. Transfer tax is usually charged on the selling price and is usually less than 1 percent.
8. Home warranty for buyers: In some cases, home buyers may request for a home warranty to cover potential repairs to home appliances, systems etc. during the first year of ownership. It’s not a must to sell your home with a warranty; you may receive a better price with the assurance that comes with providing a warranty. Typical home warranty costs are around $385.
9. Capital gains tax: You may also be required to pay capital gains tax if your house exceeds a certain price. Although it is possible to avoid capital gains tax through a number of ways, you are better off factoring this cost for obvious reasons.
10. Moving costs: Commonly overlooked are the moving expenses. Before you sell your home, you need to move your belongings to your new home and this could be costly.
Eileen Schamber is the president of the Lodi Association of Realtors and can be reached at firstname.lastname@example.org.