Costs Associated with Selling a House
While the value of real estate may drop in times of economic downturn, over time they usually increase. That means that if you’ve had your home for a few years and gained some equity, you should turn a profit when you sell. You may even be able to turn a profit in a short period of time if you get a good deal on a home and fix it up. But it’s important to remember that there are a number of costs that you will incur when selling.
While the costs to the seller are usually far less than the costs to the buyer, they are nothing to sneeze at. Here are some of the things that the seller usually pays for.
* Improvements – It may seem illogical to make improvements on a property you plan to sell, but in some cases it makes sense. Certain improvements can increase the selling price of a home beyond what the improvement cost. And some make the seller eligible for tax deductions that make them worthwhile.
* Repairs – If you want to sell your home at market value, it needs to be in good repair. People will sometimes buy homes that need work, but they expect to pay much less for them than they would otherwise. It’s usually far more cost-effective to make the repairs yourself than it is to accept a reduced offer in consideration for the buyer making them.
* Commission – If you’re working with a real estate agent, you’ll have to pay his or her commission. The amount varies, but it averages around 6% of the selling price. If the buyer has his own agent, the commission is usually split between the two agents.
* Appraisal – You’re not required to get an appraisal as the seller, but it can be beneficial to you. By having your home appraised, you can get the basis for setting a reasonable asking price.
* Cleaning – If you clean your own home for open houses and showings, you’ll only have to pay for cleaning supplies, although it will take up some of your time. If you hire someone to clean your home for you, it will cost a bit more.
* Penalties – Upon selling your home, you will have to pay off your mortgage. Some lenders instate a prepayment penalty if you pay it off early. Check your mortgage agreement or ask your lender to find out.
* Moving costs – If you’re living in the home you’re selling, you’ll have to move out prior to closing. Costs you may incur include packing supplies, storage fees, a van rental, gas, and/or hiring a professional moving service.
Selling a house isn’t cheap. But in most cases, you’ll make enough profit to cover all of your expenses and have some left over. And in the case of repairs, improvements and appraisals, the amount they add to the selling price makes up for the cost.