Dreams of downsizing your home for a luxury beachfront condo are attainable at any age. The trick is selling the right home in the right market. But have you set enough money aside in your budget to cover selling costs? In some areas, costs are quite high. For instance, if you area selling a house for sale Vancouver, you can pay a small fortune!"
The cost to sell a house varies based on the type of housing market you live in. If you're preparing to sell your home, research the most common expenses to avoid being let down by a smaller than expected profit.
For a list of all the standard costs of selling a home, read on.
Repairs
Preparing your home for sale can take a matter of weeks or months depending on buyer expectations in your market. Some homes only need a freshly cut lawn to attract buyers, while others might attract more scrutiny.
There are ways to get around extensive home repairs, but there's no way to avoid them altogether. The average cost to repair a home before selling is $1,500.
A common way to avoid renovations is to lower your sales price to reflect the need for them. But ignoring some major fixes could complicate the selling process. Here's a list of common repairs that may be mandatory before you can sell your home.
Building Code Violations
There are few ways to get around a house being up to code before selling. But to avoid a messy closing, it's best to take care of the repairs before the buyer puts a house under contract.
Building code violations are sure to come up during a home inspection, which is required by lenders before they will issue a loan. By bringing your home up to code before finding a buyer, you eliminate barriers to the buyer getting financing.
Structural Defects
Structural defects to your home should also be addressed before marketing your home. You can get away with selling the home 'as-is' and not repairing defects, but this could lengthen the sales process.
You're far more familiar with the nature of the structural issues than a buyer or home inspector seeing your home for the first time. Home inspectors tend to be more conservative when hired by the lender.
By leaving structural issues to be examined by an outsider, you run the risk of a higher estimate of the damage than what's present. Take matters into your own hands by issuing the repair yourself and documenting the process.
Safety Issues
Any safety issues are a no-brainer to repair before allowing walkthroughs of your home. Consider the liability of accidents involving the buyer and other third parties while your home is under contract.
Take the time to repair loose steps or bad wiring no matter how small the safety issue seems. Doing so can help you avoid unneeded headaches while marketing and finalizing the sale of your home.
Commissions
One of the biggest costs of selling a home is the commission paid to a realtor. Good realtors earn this money by helping you market your home to a qualified list of potential buyers.
When you find the right realtor, the length of time your home is on the market is shortened greatly. Realtors understand the legal process of selling a home in your local market and can help you manage your expectations of 'days on the market.'
Be sure to vet your realtor thoroughly before signing any exclusive agreements. Standard realtor commissions range from 5 to 6 percent of the sales price.
On a $300,000 home, real estate commissions can range from $15,000 to $18,000. This is a hefty fee for an agent who can't answer questions about your market or who can't present you with qualified buyers within a reasonable selling period.
Here's a list of key questions to ask your realtor before hiring them to sell your home:
• How many homes did you sell last year?
• Are you licensed?
• Have you ever sold a home in this neighborhood?
• Should I expect to pay closing costs?
• What is your sales and marketing plan?
• How long do you estimate the sales process will take?
• Do you have recommendations on staging?
• How often will I receive updates from you?
This is a starting list of questions to help you compare realtors. A realtor who can't answer any of the following questions could leave you doing all the work while still requiring a commission.
Choosing to sell your home on your own is a viable way to avoid this expense. For sale by owner means you list and market the property to potential buyers without the help of a realtor. Researching the housing market yourself and waiting for the right deal can save you tens of thousands of dollars in real estate fees.
Liens
A lien is a creditor's legal right to take a portion of a property to repay a debt. If you have liens on your home, you will have to pay the debt when you sell.
Not all liens require payment in full. Contact the debtor to make payment arrangements or negotiate a settlement amount before placing your home on the market.
Transfer Taxes
Transfer taxes cover the administrative expense of local municipalities on updating a transfer of homeownership.
Not every state requires you to pay transfer taxes when you sell a home. If you live in a state that does require them, consider asking the buyer to cover the cost. Buyers are usually responsible for this tax though sellers often cover it as a purchase incentive.
Closing Costs
Closing costs range between 2 and 4 percent of the sales price.
Closing costs can be paid by the buyer, seller, or both depending on the purchase agreement. In seller's markets, the demand for housing is great which leaves buyers willing to shell out more cash for properties.
In a buyer's market, buyers have far more options causing sellers to compete to attract viable customers. This means the seller almost always covers closing costs.
Reducing the Cost to Sell a House
The idea of missing out on the chance to sell your home can be daunting. But there are ways to reduce the cost to sell a house without losing potential buyers.
Depending on your market, you can offer incentives like leaving behind your flat-screen TV instead of adding fresh paint to the walls. Another negotiation might include purchasing new appliances instead of covering closing costs.
Whether selling your home with a realtor or alone, you set the terms of the agreement. For more real estate tips and tricks, check our blog for updates.
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