How Much Does It Cost to Sell Your Home?

Many sellers might not realize the true cost of selling a house until they’re signing documents at the closing table – which can quickly add up to tens of thousands of dollars.

Sellers can expect to pay between 10% and 15% of their home’s sale price in selling costs. It’s important to be aware of these costs so you can budget for these expenses or see if there’s a way to bring that total percentage down.

While the cost of selling a house depends on your unique circumstances, here are some common expenses for sellers:

    • Home sale preparations.
    • Home staging.
    • Carrying costs and losses.
    • Real estate commission.
    • Closing costs.
    • Capital gains tax.
    • The total estimate of home sale costs.

First impressions matter in real estate. A study published in The Journal of Real Estate Finance and Economics noted that curb appeal can boost a home’s value by 7%.

The cost to prepare your home for sale can vary significantly. You may need to make some minor cosmetic fixes or major repairs to enhance its curb appeal, get buyers in the door, and potentially raise your property value.

According to the home improvement information site and network Home Advisor, every home will need one or more major repairs at some point in its lifetime, which can range between $3,984 and $22,574 with a national average of $13,247. However, if your home isn’t in need of any major repairs, typical pre-listing projects include interior painting and cosmetic updates. This can cost anywhere from a few hundred to several thousand dollars, depending on what needs to be done, whether or not you hired a professional, and the quality of materials.

However, it’s important to keep your potential return on investment in mind. There’s no guarantee that you’ll recoup the cost of repairs or renovations.

Home stagers work with sellers within their budget for the best potential ROI. Stagers make recommendations from paint selection, advising whether to replace or update items, what stays, and what should be packed up and stored away. Professionally staged properties can increase the number of offers and the selling price. Staged properties may also sell faster compared to properties that have not been staged.

The Real Estate Staging Association found that homes that were staged sold approximately nine days faster than average and $40,000 over list price in 2021. The average staging investment of 1.3% resulted in a 7.1% over-list return on investment.

Home Staging Costs

The average national cost of home staging is $1776, according to Home Advisor; however, many homeowners pay between $779 and $2,851. This includes furniture and decor rental. Full furniture rentals can cost $6,000 or more over an extended period of time.

There may also be no upfront investment options depending on the staging company, listing agent or brokerage. For example, Compass offers a no-interest concierge service for sellers to stage or make upgrades to their homes that they repay at closing. The home stager may accept payment out of escrow after the home sale. The agent may also consider covering the cost if they believe it will substantially increase the selling price of the home.

The longer a home sits on the market, the higher the carrying costs like mortgage payments, homeowners association fees, utilities, and more.

Additionally, when buyers see that a home has been on the market for a considerable amount of time, they may make assumptions that there’s something wrong with the property. Homes that sit on the market for 90 days or longer are known as stale listings and may sell for less money when they finally do sell.

Another thing to consider is your homeowner’s insurance. Typical policies won’t cover claims on an unoccupied or vacant property. If your home is vacant for more than 30 to 60 days, you’ll need to purchase vacant and unoccupied homeowners insurance, according to experts at the online insurance marketplace Policygenius. While rates vary, sellers can expect to pay 25% to 50% more for vacant home insurance than they would for standard home insurance.

The real estate commission is typically the largest cost associated with selling a home. The seller can expect to pay 5% to 6% of the sale price, which is split between the brokers representing the buyer and the seller. Each agent receives a portion of this commission. Based on the U.S. News Housing Market Index, which uses data supplied by Redfin, the national median home sale price is $387,000. Real estate commission on a home of that price would be $19,350 to $23,220.

While it is possible to negotiate a real estate commission, it’s unlikely that it will be lowered. Research from the Consumer Federation of America found that 70% of agents charge a 6% commission and 73% said they would not be open to negotiations.

Closing costs are fees that are paid to finalize the transaction and transfer ownership of the home to the buyer. These fees are paid according to the terms of the purchase contract between the buyer and the seller. Both buyers and sellers typically pay their own closing costs.

Sellers can expect to pay 2% to 4% of the sale price of the home in fees and taxes on top of the agent commission. Based on the national median home sale price, this means that closing costs in 2023 for sellers are about $7,740 to $15,480, excluding real estate commission.

However, the seller’s closing costs are deducted from the sale proceeds. Here are the potential closing costs for sellers:

    • Agent commission.
    • Transfer tax.
    • Owner’s title insurance.
    • Escrow and closing fees.
    • Prorated property taxes.
    • HOA fees.
    • Credits toward closing costs.
    • Attorney’s fees.
    • Existing liens.
    • Mortgage payoff penalty.

“As the real estate market continues to boom, you might be eager to make some money by selling your primary residence; but Uncle Sam also wants his money – be aware of the tax implications of selling your personal residence at a gain, ” explains Anna Klein, a real estate-focused CPA at AKK Tax & Accounting.

Home sales may be tax-free, given that the condition of the sale meets certain standards.

“The rules are different for married versus single individuals. Per Section 121 of the Internal Revenue Code, you may be eligible for exclusion of the gain on your personal residence,” she says.

Klein explains that taxpayers can exclude up to $500,000 if married filing jointly or $250,000 if filing as single from the gain on the sale of their primary residence. Sellers must have also owned the home for at least two out of the last five years. The two years do not have to be consecutive.

You can determine the gains from the sale by subtracting the home’s basis (what you paid for the home) from its closing price (how much you sold it for). If the home was sold for more than what was paid, then that is a realized capital gain.

Total Estimate of Home Sale 

There are too many variables to accurately estimate the total cost of selling a house, but you should still try to estimate the total cost so you can be better prepared.

Assuming you sell your house for the typical home value of $387,000 in 2023, and you pay an average of 12.5% in closing costs, you could potentially be paying $48,375 and walking away with $338,625 in proceeds. This number doesn’t assume you made a major repair before selling your home and it excludes possible carrying costs and losses, existing liens and debts and a potential mortgage payoff penalty.

Source: ~ By Josephine Nesbit ~ Image: Canva Pro


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