How much expense does selling a house cost?
In short, how much does it cost to sell a house?
If you sell your house for $248,000, which is the median price for a single-family home in the U.S. in 2018, you could end up paying about $38,000 in total costs. As a seller, the real estate commission will probably be the biggest fee you have to pay.
Getting your house ready to sell
Before you put your house on the market, you’ll want to make sure it’s ready to attract buyers. As you get your home ready, there are four main costs to think about.
(1% of sale price)
When potential buyers look at your home for the first time, you want them to notice its best features and picture themselves living there. Staging comes into play here. Staging is the process of putting furniture and decorations in a home so that it looks as good as possible to potential buyers.
Fixr, a site that compares prices, says that the average cost to hire a professional stager in the U.S. is between $2,300 and $3,200. You might save money if you stage your own home, but you’ll have to put in time to get each room ready and keep it that way.
If you want to do it yourself, think about what you will need to buy. This could include painting, getting new furniture or light fixtures, curtains, and other decor. HomeAdvisor says that you could also rent a deep carpet cleaner for $35 to $50 per day or pay a professional to clean your carpets for $80 to $550.
When you’re ready to sell, staging can help. In a survey by the National Association of Realtors (NAR), 29% of sellers’ agents said that the amount buyers were willing to pay went up by 1% to 5%. Twenty-one percent said that staging made their home worth between 6% and 10% more.
Costs for landscaping are (1%)
When it comes to selling, the outside of your home can be almost as important as the inside. Curb appeal can attract buyers, especially those who shop online and use pictures to compare different homes. Landscape maintenance includes things like putting down mulch, trimming bushes, and planting flowers. Normal lawn care includes things like pulling weeds and adding fertilizer.
On the low end, landscaping can cost as little as a few hundred dollars if you just reseed the lawn or clean up your flower beds. HomeAdvisor says that a more complete service, including flower beds, plants, trees, and so on, costs around $3,239. This will depend on the size of your yard and how much work needs to be done.
Repairs and upkeep for the house (varies)
Maintenance and repair problems are one of the main reasons why sales of homes that were supposed to close don’t happen. If you sell to Opendoor, we make the repair process easier so you know you’ll get a competitive offer and have more options for how to handle any repairs that need to be done. If you’re selling your home the old-fashioned way, making sure it’s in good shape before you list it can help you avoid making big concessions to the buyer when they make an offer.
As you get ready to sell your home, check for broken or damaged parts, broken appliances, and areas that need to be cleaned or repainted. Our home maintenance checklist will guide you through common repairs that can affect the value of your home and tell you exactly what to look for as you check each area.
Getting an evaluation before the inspection can also help you figure out what needs to be fixed. The total cost of repairs will depend on how bad the damage is. As you make a list of repairs that need to be done, decide which ones you can do yourself and which ones you will need to hire someone to do. Compare quotes from different contractors so you can choose from a range of prices.
Home improvements (varies)
Besides repairs, you should think about whether you want to make any changes to the house, how much time and money it might take, and how much you might get back.
For example, a NAR survey found that kitchens are the most important room for buyers. According to the Remodeling 2018 Cost vs. Value Report, a small renovation could cost you an average of $21,200. If you do the work yourself, you’ll get back 81.1% of the cost when you sell the house, but it will take time and effort. Hiring professionals can save you time, but it may not be convenient or affordable for you.
If you don’t have as much time or money, it might make more sense to focus on smaller renovations that add value for buyers. For example, instead of redoing the whole kitchen, you could spend a weekend updating the cabinet pulls and putting up a new backsplash. Both can make your home more appealing to buyers and raise its value.
Talking about the sale
Once your house is ready to be put on the market, you have to wait for a buyer to make an offer. After you accept an offer, you can move on to the next part of the selling process, which usually involves your agent and the buyer’s agent negotiating back and forth. There is also a second set of costs to consider.
Commissions for real estate agents (about 5% to 6% of the sale price)
Working with a real estate agent means that they will do the work of selling your home for you. For example, they will set up tours, schedule paperwork, keep your listing up to date, and set up things like photos of your home. You’ll save time, but these services don’t come for free. Bankrate says that, on average, sellers pay between 5% and 6% of the sale price in commission fees. That means you’d pay $15,000 to $18,000 for a $300,000 home.
This commission goes to both your agent and the agent for the buyer. If you sell to Opendoor, our service fee is currently 5%, which is similar to the 5-6% real estate commission that covers both the listing agent’s commission and the buyer’s agent’s commission in a traditional sale. Find out more about our prices and how they compare to how things are usually sold.
You could also sell your home without an agent, but if the buyer is represented by an agent, you might still have to pay a commission to that agent. If that’s half of what Bankrate thinks the average fee is, you’d pay between 2.5% and 3%. The NAR says that 87% of buyers use an agent, so that commission is often an expense that can’t be avoided.
Seller concessions (~0% to 2%)
When you make a concession, you agree to pay some of the buyer’s costs. This is usually done to sweeten the deal and make the buyer more likely to close. For example, they may need help paying for inspection fees, processing fees, or other costs. A buyer might ask for a concession if they don’t have enough cash to cover their closing costs or if the house is older and they want to save money to make improvements. In a buyer’s market, buyers can also use concessions as a way to negotiate or to make up for having to make a higher offer to compete in a seller’s market.
The type of loan limits how much a buyer can ask for. Conventional loans that follow Fannie Mae rules can have concessions of up to 3%, 6%, or 9%, depending on how much the buyer puts down. The Mortgage Reports says that concessions are limited to 6% for FHA loans and 4% for VA loans, which are backed by the Federal Housing Administration and the Department of Veterans Affairs, respectively.
How much you pay in concessions may depend on the market you’re selling in. Opendoor looked at both public and private data on home sales in our markets and found that when buyers ask for concessions, they usually ask for 0% to 2% of the home’s sale price.
Making the deal official
As the closing date gets closer, there are still a few costs to plan for.
Costs of closing (about 1% to 3% of the sale price)
Closing costs are fees that both buyers and sellers pay at the end of a real estate transaction. They are different from agent commissions. In our blog about closing costs for the seller, we break these down. Realtor.com says that, on average, sellers pay between 1% and 3% at closing. If you want to sell your house for $250,000, you might have to pay between $2,500 and $7,500 in closing costs.
When there are fewer fees, closing costs are usually lower for the seller. Usually, the main costs you’ll have to pay are the closing fee, which goes to the closing agent, property taxes, your attorney’s fee, recording fees, a transfer tax, and any costs related to paying off your old mortgage.
Transfer Taxes
When the title of a piece of real estate is passed from one person to another, transfer taxes are due. Transfer tax can be charged by the state, the county, or the city. Where the sale takes place affects how much you have to pay. The National Conference of State Legislatures says that 12 states don’t have any kind of real estate transfer tax. Arizona charges a flat fee of $2 to transfer ownership. In the other states, transfer taxes are usually between 0.01% and 5% of the sale price.
Payoff of mortgage
Before you can officially say that a sale is over, you will need to pay off your mortgage. The money from the sale is used to pay off your old loan, but if the payoff amount doesn’t include prorated interest, there may be a small shortfall. To make up the difference, you might have to send a check to the lender.
Also, if you pay off your loan early, you may have to pay a prepayment penalty. Realtor.com says that prepayment penalties are usually between 2% and 4% of the original loan amount.
Home buyer’s warranty (1%)
A home warranty is not the same as homeowners insurance. Your homeowners insurance usually covers the structure of your home if it is damaged by fire or certain natural disasters. Realtor.com says that home warranties can cover the cost of fixing or replacing kitchen appliances, the washer and dryer, and the electrical, plumbing, and heating and cooling systems.
You can offer to buy a warranty for the home before closing, so the buyer knows they won’t have to pay for repairs as soon as they sign. Or, you could offer to pay for the warranty coverage for the first year or two after the sale. Realtor.com says that a buyer warranty can cost between $300 and $600. It’s a nice bonus to give buyers, but it’s not necessary.