What is the cost of selling a house?

 

If you’re reading this article you may initially think that this question is self explanatory. BUT, not always. Let’s go over some of the common expenses that are apart of selling your home.

 

Mortgage pay-off

If you purchased your home with a mortgage, the principal will have to be repaid to the lender, as well as any interest owed. Unless you’ve owned your home for a long time, or your home has greatly appreciated in value, a good portion of the sales price of your home will go to satisfy your mortgage. The interest on your mortgage continues to accrue each day, and documents that you receive leading up to closing will be estimates of what you will owe at closing. These numbers are calculated based on the projected closing date. If the date moves, the interest will change slightly as well.

 

Property Taxes

As the seller, you will typically have to pay a prorated amount of the annual taxes on the home.

 

Closing Costs

When I say closing costs, I’m referring to buyer closing costs. Depending on your local real estate market, it may be more or less common for buyers to ask sellers to pay a portion of their closing costs. This is something that you hash out during negotiations. You and your agent will have to determine whether to offer a seller contribution in your transaction. However, it’s’ worth noting that maximum seller contributions allowed varies based on the type of loan  (FHA/Conventional/VA?USDA, etc).

Commissions

Assuming that you are represented by a real estate agent, and also assuming that the buyer is represented by a real estate agent, and assuming that neither real estate agent is working for free, someone has to pay them for their services. The commissions of both the buyers and sellers agent can be negotiated.  The contract will also stipulate which party is responsible for paying the agents, and whether it will be a flat fee, or a percentage of purchase price, or some other valuable compensation.

 

3% commission to each agent for a total of 6% of the purchase price is common here in the Atlanta Real Estate market. I occasionally see higher commission percentages, as well as lower. With that said real estate commissions are negotiable.

 

Home Improvements and Repairs

Depending our your exit strategy, you may want to make some minor improvements, updates, or repairs to ensure that your home shows the best. In other circumstances you may have some deferred maintenance issues and  want to do some actual repairs to the house prior to putting it on the market.

 

There are also times when home repairs become apart of the negotiations. This is often hashed out between buyer and seller during the buyer’s due diligence period, during which time, buyers often have a home inspection performed on the home.

 

If you have issues come up on the home inspection, the buyer may ask for you to pay to have the repairs completed before closing, or they may ask for a reduction in price. There is also the possibility that they will ask for nothing and move forward. It all depends on the details surrounding the transaction. Just be aware that even if you choose not to perform any repairs, there is still the potential for some expense there, depending on the condition of your home.

 

Utilities

The costs associated with keeping the utilities on is really only a separate cost if you are not living in the home. The electricity, the gas, the water, and alarm (and the phone if the alarm requires a phone line) are the main utilities you need to keep on.

 

Do not make the mistake of turning off the utilities before your home is sold. This is a common mistake that can cause you major delays once you accept an offer from a buyer. Be aware that many buyers pay for home inspections, and the home cannot be thoroughly inspected by a home inspector if the utilities are not all on. It’s also common for home appraisers to want the utilities on when they visit the home. Generally, it’s a nice gesture to allow the buyers a few days grace period after closing to transfer the utilities over into their own accounts.

 

Home Warranty

Home warranties are very popular in the Atlanta market. I’ve seen home warranties included in contracts for all types of homes including, older all-original homes, totally renovated homes, and even new construction. The home warranties serve as a way to give the new buyer some piece of mind. This is an expense that is typically negotiated and can be paid for by either party.

 

Insurance

Much like the expenses of the utilities, insurance is really only considered an additional expense factor if you are not living in the home. Do NOT cancel your policy until you officially no longer own the home.

 

Landscape

The cost of cutting your grass and keeping your hedges and flower beds maintained, as well as leaves and straw blown are really only additional expenses if you aren’t living in the home while it’s on the market. But don’t let this slip. Maintain your curb appeal. Remember that it’s not over until it’s over, because your buyers contracts could fall through. Keeping the landscape looking sharp will help with attracting buyers. And on another note, If you aren’t living in the home, maintaining the landscaping can also contribute to your home security, because the grounds are still being maintained as if the home is occupied. Yards that arent cut regularly can signal to a bad guys that no one is around and that your property may be a could candidate for theft or burglary.

 

Staging

Home staging is typically optional. Staging services can give your home a leg up against the competition because it showcases the potential of what the home can look like at its best. The term “staging” is somewhat general. Staging can simply involve decluttering a home and organizing its contents. On a larger scale staging can involve buying/renting decorations and furniture, all the way up to renting an entire home’s worth of furniture, along with a designer, and a moving crew. Staging is used in both occupied homes and vacant homes that are on the market.