Just like with buying a home, selling your home also comes with expenses, though not as big as when you’re buying. Preparing your home for the sale would cost you money and you have to know what these expenses are so you won’t be taken by surprise when you get the bill.
Here are some of the common expenses sellers have to shoulder when listing their property on the market.
1. Home repairs and inspection. Before you open up your house to buyers, you have to repair your squeaky floors, dripping faucets, window cracks and other home features that have been damaged due to occupancy or use over time. You might also need to hire a pest control inspector to check if your house is infested with termites, mold, rats and other unwanted guests.
2. Staging. You can do the staging yourself or you can hire an interior designer to organize and decorate your home. Staging makes your house more attractive and it helps to win the competition.
3. Real estate commission. This could be your biggest expense because the commission of your real estate agent and the buyer’s real estate agent ranges between 5% to 7% of the selling price. As the seller, you are the one who has to shoulder this expense. You pay the commission to the agents’ brokerages and they will be the one to pay the agents.
4. Attorney fees. Buying a home means lots of legal documents. You need to have an attorney go through each document to check for any hidden clauses and to explain to you the contract without the legalese. In some states, attorneys are required to close the sale.
5. Property taxes. Both the buyer and the seller have to pay property taxes depending on the length each stayed in the house. It will also depend on the arrangement of the buyer or seller. For example, the seller could pay the property taxes for the year and the buyer could just reimburse his part.
6. Closing costs. The buyer can negotiate with the seller to shoulder some of the closing costs. However, these costs will also be added to the home price the buyer has to pay.
7. Title search. Either the buyer or the seller can pay for the title search. The title search reviews all public records to make sure that there are no unpaid financial obligations that could hinder the transfer of ownership.
8. Lien Releases. If the title search showed unpaid debt like bills, loans, taxes, contractor costs, etc, you must pay it all off to clear your title. Only then can you sell your home.
9. Owner’s title insurance. If the title search misses something, a lien remains unpaid or the seller doesn’t actually own the property, this insurance protects the buyer from any financial loss. The seller generally pays for this.
10. Home warranty. Depending on your deal with the buyer, you can pay for a one-year protection plan on the buyer’s behalf to cover repairs or renovations that needed to be done on the house.