The number of homes for sale has been limited recently causing the demand, as well as the cost, to rise. With that in mind, many home owners have contemplated putting their homes on the market to make the most of the profits they stand to gain from the increased property values. However, many home owners overlook the cost associated with selling their homes.
To help you make an informed decision before you list, we have put together a list of many of the hidden and forgotten costs that come with selling your home.
The realtor’s commission
This will be the bulk of your closing expenses when you sell your home. Most transactions have a standard 6% commission to be split equally between both the buyer’s agent and the seller’s agent. The seller is responsible for covering both commission unless otherwise agreed upon in the contract.
The only exception would be if you are selling your home on your own, known as a For Sale By Owner or FSBO, and then the commission percentage would be reduced to 3% to cover the buyer’s agent alone.
Home repairs or enhancement
In order to get your house in selling shape, there are going to be some necessary repairs or enhancements that are necessary. Depending on the condition of your property, it can be as small as fixing a leaky faucet or a large as replacing a roof. These costs can add up quickly so it is important to be financially prepared when you are ready to list your home for the eventuality of these costs.
Temporary storage or housing
Once your home is on the market, showings make it hard for you to keep all of your furniture, personal belongings, and valuables in their normal place. When it is time to declutter and pack things away, where are you putting your stuff? Unless you have your new home already purchased, temporary storage is a viable option but it will cost you.
And what are your plans if your home sells before you have locked in the deal on your new dream home? Make sure to budget for a temporary place to stay, as well.
If you are planning to move out prior to the final sale of your home, you will still need to maintain your electricity, gas, trash pick-up, and water services until the home closes. Not only do the utilities need to be active, but you will also need to keep your home owners policy active until the final paperwork is signed.
Contribution to buyer’s closing costs
This will vary depending on the buyer offer you accept, but many sellers make some contributions to the final closing costs on the behalf of the buyer. If that is your situation, you will see the agreed upon amount deducted from the total that you will be taking home from the final sale.
Title insurance fees
Lots of hiccups can happen with undisclosed liens or levies when it comes time to buy a home. Title insurance is there to protect parties from any future issues that might arise to ensure ownership rights. It is customary that the seller’s side will cover the cost of this premium in the transaction but the cost of this coverage can vary depending on who you are working with and where you live.
Regardless of when you decide to sell your home, you should make the decision based on what is best for your family and your lifestyle. Knowing what costs can be associated with the sale going into the process should not discourage you from listing but rather can help you to be better prepared for when those eventualities arise.