Did you know that it costs money to sell your home? That’s right. Selling a home is not your typical exchange of goods because it’s actually quite complicated. Both the buyer and seller generally pay other fees that are part of the transaction.
It’s essential to understand and remember all the expenses you could incur when selling your home because it will help you know if you can really afford to sell your home.
Commission to Realtors
The most significant fee you’ll pay when selling your home is the commission to the realtors who are representing you and the buyer. On average, realtor commissions are 5-6% of the home’s selling price. If your home is sold at $300,000, you’ll end up $15,000-18,000 in commissions. Many sellers take this additional expense and add it to the listing price of the home ahead of time.
It’s hard to escape this cost of selling a house, but it could be worth it not to have to represent yourself during the selling process. You may want to explore other options for selling your home that has a lower total commission attached to it if you know the equity in your home won’t cover them.
Transfer Tax fee
When a home is sold, the title for the house will need to be transferred to the buyer’s name, and there’s a tax that comes with that. This is similar to when a car’s ownership is being transferred. The seller will typically absorb the transfer tax fee.
In some states, an attorney must be hired to draft the contract between the buyer and the seller to transfer ownership of the home legally. In some areas, the buyer does pick up this closing cost, but you should be prepared to accept this expense to be safe. If you decide to represent yourself as the seller, you will need to hire an attorney for your side of the sale.
Mortgage payoff fees
Wouldn’t it be nice if you got all the money in cash after your home sells? If only it worked that way. First, you will need to pay off your mortgage. Some mortgage lenders include a mortgage payoff penalty. Necessarily, you will pay a fee for paying off your mortgage early.
Some sellers opt to move out of their home while it is being sold. It may be because you’ve already purchased a new home, you are undergoing an assisted house move or some other scenario, but you will need to keep essential utilities on until the home is sold. It’s not a fee, but you will continue paying for the services for the house until they can be put in the new homeowner’s name. These extra expenses could last days, weeks, or months, depending on how quickly your home comes off the market.
Other possible closing costs
There are some items that you may be responsible for as a seller when the home is closing. You could find yourself paying escrow, brokerage, and courier fees that are associated with the transaction. Occasionally, sellers will pick up the tab on Homeowners’ Association (HOA) fees for a specified period.
There is no binding law that states buyers or sellers must cover certain costs when homeownership is being transferred. If the market is considered a “seller’s market,” you may ask the buyer to pay the majority of closing costs and other fees to prove they are serious about purchasing your house. In a “buyer’s market,” the opposite is correct, and you should anticipate taking on additional expenses.