by Marty Orfice
Most homeowners do not realize the true cost involved in selling a home. To calculate the true cost to sell your home you need to include the Realtors commission, repairs, house closing costs, holding costs, and offer discount.
How much money will each item cost you?
Realtor’s Commission
When you list your house with an agent, you immediately have to mark up the price to cover the 6% or more commission they make, or else lose that money from your profit margin. On a $200,000 house, you will have to pay a realtor $12,000 just to sell your home!
Repairs
Another overlooked cost is the price you have to pay for all of the repairs and updates to get it ready for listing. Repairs are not only costly, they can take time to complete. These updates can include painting, new carpeting, new flooring, landscape work and minor remodeling. Repairs can cost hundreds or thousands of dollars, depending on the size and age of the house. Major repairs like plumbing, electrical or HVAC systems can easily cost thousands of dollars in fixing.
House Closing Costs
When you close on a house, you will have all of the fees associated with closing. You have to go through the realtor’s title company and pay fees, and then the mortgage company has fees and any other miscellaneous fees incurred while closing. The house closing costs are usually another 3 to 5% of your home sale price. This could be an additional $6,000 to $10,000 on a $200,000 house.
Hidden Costs
Besides obvious expenses to sell your house, there are hidden costs too. Holding costs is the money that you pay while the house is being sold. While your house is on the market, you continue to pay the mortgage, the taxes, insurance, and the maintenance. In today’s slow market, it may take 6 to 12 months before you find a buyer. And when you do get a purchase agreement, you often have to wait another 30, 60 or even 90 days before you can close and get your money!
Also, depending on your region, sale prices range between 88 and 97% of the asking price. With so many houses for sale in certain areas, it has become a buyers market. To sell your house at all, you may need to drastically reduce your price, costing you yet more money.
Do the following math to figure out how much money selling your home with a realtor is going to cost you:
• Start with the asking price of your house.
• On average, the sale price is 4% lower, so subtract 4%.
• Now, take the sale price and subtract 7% of the price for the realtor’s commission.
• Deduct another 3% for house closing costs.
• Finally, subtract 4% for the cost of repairs.
How much is left? Not as much as you thought? It’s time to check into some other options if you want to sell your home!
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