Finally decided to put your home on the market? You can already see the money pouring into your bank account from the sale. With the price of homes rising around the country, chances are that your home has appreciated over the years. Plus you’re selling your home at a time commonly referred to as “a seller’s market,” so it would be reasonable to expect that you’ll make a decent profit, right? Not so fast.
Many people forget that selling a home comes with a price tag and sometimes a hefty one at that. This is about the time when reality sets in. Some costs associated with selling home you most likely already expected, like realtor commissions for both buyers and sellers agents (normally about 5% to 6% of your home’s sale price). But there are also various expenses, minor and not so minor, that you must be aware of. Have a conversation with enough people who recently sold their home and you’ll no doubt hear some heavy sighs, followed by a price-gouging story or two, or how a flood of unexpected expenses affected the final profit of their home sale. But you won’t be caught off-guard if you already understand what to expect. With a little planning and research, you might even find ways to reduce or eliminate some of these costs.
Whether your home is seen from the online listing profile or in person, the first impression that buyers get from your home is its curb appeal. The condition of your landscaping is becoming more and more important to potential home buyers. The average cost to install landscaping is $3538, according to ImproveNet’s landscaping installation cost estimator. You can cut these costs dramatically by doing some of this labor yourself. Go to your local Lowe’s or Home Depot and pick up new mulch and flowers that compliment the look of your home. Mow the lawn. Trim the hedges and remove the weeds. This basic upkeep can make a big difference in the initial impression your home gives. As they say, first impressions are everything. If landscaping is not your thing, you may want to hire someone to have this work done; just be sure they leave things clean and tidy.
Hiring an interior decorator to help remove unnecessary items, change the organization of, or completely refurnish, rooms can drastically increase the attractiveness of your home. Buyers want to be able to envision what it will be like to live in the home so obviously, hiring an experienced decorator to make it more attractive is a great idea. According to The Real Estate Staging Association, homes that are professionally staged spend 72% less time on the market. That is a huge difference.
The cost of professional staging can range anywhere from a couple of hundred dollars, to upwards of $5,000. You can cut some of these costs by taking the DIY approach with things such as, painting, minor electrical work, updating lighting fixtures or replacing tiles. If your budget doesn’t allow for these things, small changes such as packing away personal items (particularly family photos), cleaning windows, replacing towels, adding candles or having a small bowl of fruit in the kitchen can make a big difference. Don’t leave potential buyers wondering what a room is for. The goal is to have your home show like a model, so they can visualize themselves living there.
If you have already moved out of the home, be prepared to pay double utilities while the home is being shown up until the date of closing. No potential buyer wants to walk into a dark home that is extremely cold or hot. This makes for a very uncomfortable environment for showing and they will most likely rush through it just to get out of there–and on to the next house on their list.
For more practical reasons, leaving your air conditioning off in the summer months opens you up for risk of mold damage. According to Angie’s List, mold remediation can cost anywhere from $2985 to $3279. Also in order for your buyer to secure financing on the home, the lender will hire an appraiser. If the utilities are disconnected, the appraiser will not be able to complete the appraisal until they are turned back on. If the appraisal can’t be completed, the buyer’s loan will fall through. This will also affect any walkthrough or final inspections, so it’s your best bet to keep them connected up until closing to avoid the hassle.
4. Homeowners Insurance for Vacancy Period
Your current homeowners insurance policy may not cover the property when it is vacant. When a home is left vacant it poses more of a risk for things like vandalism and break ins. You’ll want to be sure to check and see if this coverage is listed on your insurance policy. If not, ask your insurance provider for a rider to cover the time that the property will be vacant. If you find that your insurance agency does not offer this endorsement, then you can purchase a separate vacant home insurance policy.
5. Professional Photographs
80% of all home buyers search online for pictures or virtual tours before they even consider going inside the property, according to Real Estate Statistics. The DIY approach is not suggested unless you are a professional photographer, preferably someone who specializes in real estate photography. Real estate photographers range anywhere from $300 to $600, but it will be well worth the money. With only 15 to 20 percent of listings using professional photography, this can give you a massive advantage. So the moral of the story? Slowly back away from the iphone and hire a professional photographer.
You can make your friend with the pickup truck help you move, but sometimes it’s just worth paying for the luxury of having someone pack your boxes, take them to your new place and unpack them without ever having to lift a finger. Visit places like HireAHelper.com to find affordable movers near you.
7. Transfer Tax
You may be required to pay transfer taxes. Your state may charge nothing, others have a simple flat fee, and this price can vary from county to county. Check with your real estate agent and closing attorney for this information.
8. Realtor Commission
As the seller of the home, you will most likely have to pay the entire 5% – 6% buyer and seller agents commission. For ways to lower this price, refer to Zillow’s article “How To Negotiate With A Listing Agent”.
9. Inspection Reports
Hiring a professional to inspect your house for termite, pest or architectural damage is typically paid for by the potential buyer. According to HomeAdvisor, the average inspection cost around $315, but there are extra cost that can creep into the overall price such as, radon testing ($100-$200), mold ($820 for test/$2,200 for removal), asbestos ($400-$800 for test/ $400-$30,000 for removal), sewer scope ($85-$300) and lead ($300 for test/ $950-$2,300 for removal). Much of the testing requires special certification, so finding a qualified inspector may come at additional cost.
You may be thinking, “This is rubbish. The buyer can pay for their own inspection.” Sure, if you want to be surprised late in the game and potentially watch your deal fall through because of some issue that you were unaware of. Perhaps you would agree that it would be to your benefit to know exactly what a home inspector is going to find before the buyer brings one into the home.
10. Closing Costs
Through the negotiation process, you may have reached the agreement that you will pay some of the costs associated with closing the deal, such as transfer recording and notary fees, title and homeowners insurance and appraisals. If you are selling your home in a slower market, buyers might ask you to cover a large portion of the closing cost in order to close the deal. This may add up to about 2% to 5% percent of the sales price.
So when you’re ready to put your home on the market, take advantage of some of these tips. You just might see more money pouring into your bank account and less dripping out.