The Costs of Selling Your Home: What to Budget For

Dec 24, 2023 | Selling

Home » The Costs of Selling Your Home: What to Budget For

Hey there, homeowners! Thinking about setting out that ‘For Sale’ sign on your property? Well, let’s talk turkey—or better yet, let’s talk dollars and cents. We all dream of the big payday when the house sells, but have you ever wondered about the costs of selling your home that come before the celebration? Let’s break it down, shall we?

The Usual Suspects: Agent Commissions and Home Inspections

So, you’ve decided to sell your home. Great! But remember, unless you’re going solo (more power to you!), you’ll likely be working with a real estate agent. And they don’t work for free. Typically, they get around 6% of the sale price. For a $300,000 house, that’s $18,000. But hey, they’re worth their weight in gold when it comes to getting you through the home-selling labyrinth.

Next up, home inspections. It’s like a medical check-up for your home. This could set you back about $200 to $500. But it’s a small price to pay to avoid any nasty surprises that could pop up during the selling process.

Primping Your Property: Prep, Staging, and Marketing Costs

Ever heard the phrase, “You’ve got to spend money to make money?” That’s especially true when selling your home. Preparing your home for sale might involve repairs and upgrades, which could range from $1,000 to $3,000, depending on what needs to be done.

Staging your home is like setting the stage for a play. It helps buyers visualize their life in your home. Professional stagers can cost anywhere from $100 to $150 per hour, but a well-staged home can often sell faster and for more money.

And let’s not forget marketing. In the age of Instagram, a picture is worth a thousand words—and potentially thousands of dollars. Professional real estate photography can run around $500, but stunning visuals can grab potential buyers’ attention like nothing else.

The Home Stretch: Closing Costs, Transfer Taxes, and Legal Fees

This is the final stretch! But there are still a few hurdles to clear. Closing costs, which cover a variety of administrative and legal costs, typically range from 1% to 3% of the sale price.

Part of closing costs include escrow fees, often known as settlement fees, which cover the services of the escrow company, which acts as a neutral third party holding onto the funds during the transaction until the deal is finalized.

Typically, the buyer and seller split escrow fees, although who pays can sometimes be a negotiation point in the contract. The cost can vary widely depending on the value of your home and where you live. However, a general rule of thumb is that they can range anywhere from 1% to 2% of the sale price of the property. So, for a $300,000 home, expect to budget around $3,000 to $6,000 for escrow fees. Just another important consideration to keep in mind when you’re tallying up the costs of selling your home.

Transfer taxes can be a bit of a wild card, varying based on location, but they can be up to 2% of the sale price. And if you decide to hire an attorney to help with the process, it could cost you $150 to $350 per hour.

Capital Gains Taxes: The Hidden Cost

Last but definitely not least, let’s talk about capital gains taxes. This is the tax you pay on the profit from selling your home. If you lived in the house for at least two of the last five years before selling, you can exclude up to $250,000 ($500,000 if you’re married) of that gain from your taxes. Anything over that, you’ll have to pay capital gains tax on. Depending on your tax bracket, this can range from 0% to 20%. It’s important to factor this potential cost into your calculations when determining the financial implications of selling your home. Remember, it’s always wise to consult with a tax professional to understand your specific situation.

Bridging Loans and Moving Expenses: The Under-the-Radar Costs

Just when you thought we were done, there are a couple more costs to consider: bridging loans and moving expenses. If you’re buying a new home before you’ve sold your old one, a bridging loan can be a lifesaver. These short-term loans, designed to bridge the gap between selling and buying properties, usually last less than a year and have higher interest rates than regular mortgages. They can vary greatly based on the size of the loan and the duration, so it’s essential to factor this into your budget.

Last but not least, let’s not overlook moving expenses. Whether you’re hiring professional movers, renting a truck, or bribing your friends with pizza and beer, moving isn’t free. Professional movers can cost anywhere from $200 to $2,000, depending on the size and distance of the move. And if you’re going the DIY route, don’t forget to factor in the cost of packing materials, fuel, and that well-deserved pizza after a long day of heavy lifting. All these costs can quickly add up, so be sure to include them in your overall home-selling budget.

Bringing It All Together: Budgeting is Key

By now, you’re probably thinking, “Wow, selling a home includes a lot of costs!” And you’re right. But by understanding these costs upfront, you can budget effectively, avoid surprises, and maybe even save some money along the way. So, plan wisely, budget carefully, and here’s to a successful—and profitable—home sale!

(Note: All costs mentioned are estimated averages and can vary based on location, property condition, and other factors. Always consult with professionals and conduct thorough research.)

At Property.com, we’re here to guide you through every step of your real estate journey. Knowing the home selling costs you need to budget for is just one of the many resources we provide to help you achieve your real estate goals.

Keep exploring our many helpful articles and resources, and stay informed on the latest news. Sign up here for news on what’s important to you. Your real estate dreams await! With Property.com as your partner, you have the power to make them yours.

Author

  • Beth McNeill, PhD

    Beth McNeill is a distinguished content creator and educator, holding a doctorate in sociology. Renowned for her expertise in the evolution and assimilation of scientific and technological knowledge, Beth has made significant contributions through her writings, which have been featured in both professional journals and major news publications. With over two decades of experience, she has also established herself as a compelling public speaker and a university professor, sharing her insights and knowledge with a wide range of audiences.

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