Costs to Sell Your Home

Some people actually believe they will be “getting” what they sell their house for and are shocked at closing by the number on their side of the HUD-1 (ask any closing attorney). Warning! There are tremendous costs to sell.

What costs will you incur when you sell?

To begin with, you will not get your asking price. In this economy, a 5% discount is conservative, 10% may even be conservative (unfortunately). So, if you list your home for $200,000 an offer of $180,000 should not be a surprise.
Don’t forget to deduct real estate commission from your proceeds. I’m always amazed, truly, by the number of sellers who know about this cost but don’t deduct it mentally from what they will receive at closing. Real estate commission is a true expense if you have your house listed with a Realtor and/or if a Realtor brings you a buyer. The commission you’ve agreed to pay will be deducted from your side of the settlement statement.
Inspections. Every home inspector will find needed repairs (that’s what they’re paid to do) and most sellers have no idea how much those repairs are going to cost. Especially in today’s real estate market, buyers want all that stuff repaired.
Pest inspections. Insects such as termites, not neighbors.
Home Shield. A service contract that covers the repair or replacement of some of the most frequently occurring breakdowns of certain home system components, i.e. heating and air conditioner units and appliances. The service contract is good for one year and today’s buyers expect this to be provided by the seller.
Then there are recording fees, attorney fees, sometimes a survey, transfer tax (varies by state, even county), document prep fees, title insurance, courier fees, etc. These fees typically amount to 3%-5% of the selling price of your home.

A quick formula we use for determining costs to sell is:

Start with your asking price
Be realistic and expect your offer to be 7% lower, subtract 7%
Take your selling price and subtract 6% for the Realtor commission
Deduct another 3% for closing costs
Finally, subtract 4% for the necessary repairs

Can you sell for the price you come up with using this formula? If not, can you put off selling your home? If you need to move now, is renting this house out something you can consider? What are your options?

Our company, All Property Solutions, buys several properties each month and I always warn sellers that, when listing the house for $100,000, your real number at closing is closer to $80,000.

If you need help determining how to sell or rent out your home, write to me here or, if you’re in the Triad, NC area, contact us at www.All Property Solutions.com for a free consultation today!