✏️ Editor’s Note: Realtor Associations, agents, and MLS’ have started implementing changes related to the NAR’s $418 million settlement. While home-sellers will likely save thousands in commission, compliance and litigation risks have significantly increased for sellers throughout the nation. Learn how NAR’s settlement affects home sellers.
8% to 10% of the sale price is how much it costs to sell a house. This includes agent commissions and closing costs. Add home staging and concessions, and this price shoots up to 12% to 15% of the sale price. That’s almost $51,000 on a $431,000 home.
Of course, every home sale is different, and so are the costs. It depends on your house, its location, and the area-specific factors. However, 50 grand is a steep price to pay.
You can lower the home-selling costs with Houzeo’s flat fee packages. You save thousands of dollars by avoiding the 3% listing agent commission.
💲 Major Home Selling Costs
- The seller pays a 6% real estate commission of the final home sale value.
- Closing costs make up 2% to 3% of the sale value.
- Seller concessions are optional but can go up to 6% of the buyer’s loan.
- Sellers spend $5,400 on home improvements on an average.
Cost to Sell a House: Necessary Expenses
Here are some of the non-negotiable costs of selling a house:
1. Real Estate Commissions
When you sell your house, 5% to 6% of the sale price goes to the real estate agents. It is, by far, the biggest cost a seller has to bear. For a $400,000 home, Realtor commissions can set you back by $20,000 to $24,000.
You can bring down commissions by negotiating with your agent. Realtors are open to commission breaks in a seller’s market, as houses sell fast with little effort. You can time your sale accordingly and reduce your selling costs.
2. Mortgage Closure
After the home sale, the proceeds go towards paying off your mortgage first. You’ll find the outstanding balance a little higher than the remaining balance on your payoff letter. This is because lenders charge prorated interest on the mortgage.
Additionally, you might incur a prepayment penalty if you sell within the first two years of home ownership. You can contact your lender or check your loan documents for the exact value. It’s usually 1% to 2% of your loan balance.
3. Home Repairs
Most home sales include an inspection contingency. This allows buyers to conduct a home inspection and request repairs before the sale. The repair costs vary depending on the requirement.
You can save on repair costs with an all-cash offer. Many investors and companies in the market are ready to buy houses with cash in “as-is” condition. However, you’ll only receive 30% to 70% of your home’s Fair Market Value in such deals.
4. Moving Costs
Moving costs can vary widely based on distance and the amount of possessions you have. On average, it will cost you $1,250 for a local move and $4,890 for a long-distance move.
These costs include packing, transportation, and unpacking of all your belongings. Many moving companies feature online calculators to help you know the exact moving costs and budget accordingly.
5. Closing Costs
Closing costs usually range from 1% to 3% of the sale price, excluding Realtor commissions. These include HOA fees, recording and settlement fees, escrow, mortgage fees, and buyer’s concessions.
Closing costs also include property taxes and transfer tax. In rare cases, your sale may also attract a capital gains tax. This tax is applicable if the profits from the sale exceed $250,000 (or $500,000 if filing jointly). In such cases, you’ll have to pay 15% to 20% of profits in taxes.
Cost to Sell a House: Optional Expenses
While the following costs may add to your total outlay, these can help you snag a better price and help you sell fast.
1. Home Improvement
65% of sellers take up at least two pre-listing home improvement projects. And they spend an average of $5,400 to service these improvements. All to make their home more sellable.
Some improvements can also increase the cost basis of your house. This could help you avoid capital gains taxes at the time of sale.
2. Home Staging
Usually, home staging will cost you anywhere between $784 and $2,812. But it’s definitely worth it. A well-staged home sells faster and often at a better price.
You can hire professional home stagers and real estate photographers to do the job for you. With the right staging, you can show buyers the real potential and value of your house.
3. Seller Concessions
You can offer to bear some of the buyer’s cost in an effort to sweeten the pot. In a buyer’s market, this could help your house sell faster. Concessions usually include costs like property taxes, title insurance, origination fees, etc.
But as per housing regulations, there’s a cap on seller concessions. You can only pay the same amount in concessions as your other closing costs. For instance, if your closing costs are $5,000, you can only pay up to $5,000 in concessions.
4. Pre-Inspections
Typically, pre-inspections can cost you $350-$500. Of course, the price varies based on square footage, age of the home, and location.
Pre-inspections provide you with upfront information about the condition of your house. This gives you more control over your repairs and strengthens your negotiating position. A professional home inspector can highlight the crucial home repairs and avoid unnecessary expenses.
How Much Does it Cost to Sell a House: A Breakdown
Let’s say you bought your home for $400,000. You made a down payment of $20,000 and chose to service the remaining $380,000 through a mortgage.
Five years later, you list your home in a raging seller’s market, for which you get an offer of $500,000. By then, you’ve brought down the mortgage balance to $320,000. That makes your total profits after the mortgage payoff $180,000.
How much of that profit is actually yours? Let’s break it down.
How Much Does It Cost to Sell a House: Common Costs Breakdown
How Much Does It Cost to Sell a House: Optional Costs Breakdown
| Selling Costs | Expenses |
| Pre-Inspections | $400 |
| Home Improvements | $6,000 |
| Home Staging | $1,500 |
| Seller Concessions | $1,500 |
| Total Cost (Approx. 2%) | $9,400 |
In this scenario, your total cost to sell a house might range from $370,000 – $379,400. This is approximately 10% to12% of your sale price and leaves you with a walkway profit between $120,600 and $130,000.
How to Reduce the Cost to Sell a House?
Here are some low-cost alternatives to reduce your selling costs:
- Sell As-Is: If you sell your home as-is, you can save on repair costs. Moreover, this is also a faster way to sell a house, especially in a buyer’s market. But bear in mind that the company or investor may offer a lower price.
- Skip the Agent: You can save 2% to 3% of your home’s value if you don’t opt for an agent. Instead, you can go FSBO and choose Flat Fee MLS to list, negotiate, and sell your property on your own.
- DIY: You can remove old items, spruce the outdoors, shift furniture, and declutter and depersonalize. This can save costs associated with home staging.
- Negotiate: Everything is negotiable, including Realtor commissions. Agents will offer a lot of wiggle room during a seller’s market, as houses sell fast with little effort. So you can time your sale accordingly and snag lower commissions.
The Bottom Line
A house sale comes with various costs, including real estate commissions, closing costs, and optional staging expenses or concessions. In total, these could set you back by 10% to 15% of your sale price.
Fortunately, you can knock off a few percentage points with DIY repairs, strategic negotiations, and creative marketing strategies. Moreover, you can skip agent commissions and save 5% to 6% of the sale price with FSBO.
Houzeo allows you to list your house on your own without the help of an agent. With an easy-to-use platform, manage all your listings and negotiations on the go and save on those pesky selling costs.
Frequently Asked Questions
Is it compulsory to pay seller concessions?
No, seller concessions are not mandatory. However, in a buyer's market, bearing some of your buyers cost can make the deal go faster.
What is a listing fee?
Listing fee is a part of real estate commissions that you have to pay your Realtor when selling. It usually costs around 2% to 3% of the total sale price.
Can you sell a house without repairs?
Yes, you can sell your house in as-is condition to investors and cash-buying companies without repairs. However, you won't receive your full fair market value as these companies usually deduct renovation costs from sale price.
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