What Does It Cost to Sell a House
The old adage is true, you have to spend money in order to make money — even when selling a house. Many homeowners assume that when the time comes to sell it’s all profits and no pay, but that isn’t quite true.
In fact, homeowners have to be prepared to spend several thousand dollars when selling their homes. On average, it costs between 10-15% of the sale price to sell a house. That means that on a $300,000 house, sellers should expect selling costs between $30,000 and $45,000.
Why can selling a house be so costly and what can homeowners do to maximize their profits? Join the team at Amy Stockberger Real Estate as we break down what it costs to sell a house.
The Cost of Selling a House
It’s understandable that selling a house costs money. There are several people and entities involved and each one will require payment for their efforts.
But how does the cost climb into several thousand dollars so quickly? Let’s examine some common house-selling expenses.
Cleaning and Preparation
It’s possible to sell a dirty house but sellers can’t expect to get top dollar for it. At the very least, sellers should thoroughly clean and declutter their homes before placing them on the market.
Try to remove personal items as much as possible. Buyers need to be able to envision themselves living in the home. It’s hard to do that with other people’s little kids or furry friends frolicking all over the walls.
Excess items make a home feel crowded so many homeowners rent a storage unit to store items they don’t use every day.
To save money, some homeowners may choose to do all this work themselves. However, it is easier and more efficient to hire a cleaning company — especially for those short on time. Some may even contract a cleaning company to keep the home in tiptop shape so it is always ready for showings.
Curb appeal has a huge impact on buyers. After all, their first impression is already formed before they even walk through the front door.
It’s hard to quantify how much of an impact it has, but data suggests that homes with an inviting exterior sell for between 7% and 10% more than a similar home with a less inviting exterior.
For this reason, sellers should take their landscaping into consideration. Extreme measures like installing new plants or hardscapes usually aren’t necessary. However, simple maintenance like cleaning up fallen leaves and mowing the grass can go a long way towards perking up the exterior.
Repairs and Improvements
There is no perfect home on the face of the earth. There are so many systems and moving parts in modern-day homes that even brand new homes can benefit from some repairs.
The budget for these repairs will vary widely. Some homes may require a $15,000 new roof whereas others will only need minor DIY repairs that can be done with a few items from the hardware store.
Older homes may have undesirable features that will make it harder to sell the house. In this case, it can be beneficial to make home improvements even if the ROI is less than 100%.
If most buyers are likely to pass over a listing because of this undesirable feature, it’s a good idea to put the money into updating it. This is on a case-by-case basis and getting professional advice is recommended.
No one can buy a home they’ve never heard about. Marketing is a key part of being able to sell a house quickly and for top dollar.
To that end, many sellers hire professional photographers to capture high-quality images that will portray their homes in the best light. Some may even invest in drone/aerial images or video to help their listings jump out at the right buyers.
To take things one step further, some sellers also invest in home staging services before bringing in the photographer. Professional home staging can make a huge difference in buyer perception, which is ultimately what the sale price is based on.
For a REALTOR® in Sioux Falls , the commission is usually a larger piece of a seller’s closing costs. The industry standard is between 5% and 6% and the seller is typically responsible for all of it.
The good news is that sellers usually don’t have to come up with the money for this out of pocket. This expense is written into the real estate contract and deducted from the profit the seller receives from the sale.
Other Closing Costs
There are various other closing costs that may be involved in a sale. These include:
- HOA fees
- Escrow fees
- Title insurance
- Capital gains taxes
- Property taxes
- Transfer taxes
- Attorney fees
Most of these costs are covered by the money from the sale. However, if the seller won’t be gaining much cash from the sale (low equity, house underwater, etc.), they must be aware of these expenses.
The costs don’t stop once the house sells. Sellers will also have moving expenses to worry about — and this expense usually pops up before they get the money from the sale.
The seller may need to rent a house or hotel room while they are between homes. It may be necessary to place some items in storage etc.
Tips for Reducing Expenses and Maximizing Profits
The big question then is how to sell your home to make more money. The biggest thing is to look carefully at each of the aspects we’ve already covered.
Which ones are necessary for your particular sale? Are there ways you can cut expenses? Here are a few tips to help sellers get the most from their home sales.
Choose the Right Repairs
It isn’t always beneficial to make all the repairs a house may need. Simple, less expensive repairs that have a big visual impact make more sense than investing thousands of dollars in brand new windows or a new furnace (unless those things are obviously broken, of course).
Simple, impactful repairs include fixing faucet leaks, freshening both interior and exterior paint, and repairing a broken porch step. Since most homeowners are used to seeing their home’s defects, they don’t always notice them. It helps to have a friend walk through and point out eyesores or potential problems that jump out at them.
DIY Home Prep
It can be a big job to prepare a house for sale, depending on how much work needs to be done. However, sellers can reduce their selling expenses considerably if they can handle much of the work themselves.
Most people know how to handle a paintbrush and homeowners generally have a good idea about simple repairs. Plus, there are lots of resources online that will help with how to stage a house for sale or how to do your own real estate photography .
There is a caveat here, though. It is important to know the home’s potential buyer pool. For example, when selling a higher-end home, buyers will unconsciously expect a higher-quality listing. It is a good idea to invest in professional services in those cases. It’s all about understanding who the potential buyers will be.
Hire a REALTOR or Real Estate Agent
We mentioned earlier that REALTOR commission is typically one of the biggest closing cost expenses. However, hiring a good real estate agent is invaluable for getting top dollar for a home.
An experienced REALTOR has their finger on the pulse of home sales in their area. They can advise you on everything from which repairs are absolutely vital to whether or not you should hire a staging professional.
For example, in a hot seller’s market, sellers can often get away with not making certain repairs. Buyers will be so happy their offer is being entertained they won’t care that they’ll have a few DIY projects to handle as they move in.
The average seller isn’t going to understand these subtleties. A real estate agent does. They can keep you from wasting money on unnecessary prep or ensure that your house sells quickly because it is perfectly prepped for the current market.
To drive the point home, according to the National Association of REALTORS , the typical home sold by the owner sold for $260,000. Compare that to $318,000 for agent-assisted sales.
A good agent can easily score enough more on the sale to pay their own commission and boost the seller’s profit as well. Plus, there is far less work and more peace of mind for sellers who work with an agent. They are professionals for a reason!
Sell Your House, Maximize Your Profit
The main takeaway from all this is to realize that selling a house takes time and money. Unless you already have a buyer (friend, family member, etc.) it generally isn’t a good idea to try to sell your home yourself. You will end up doing a whole lot of work and probably still leave money on the table in the process.
If you want to know how to sell your home to make more money, hire an experienced, local team like Amy Stockberger Real Estate who can tell you exactly what you need to do. Reach out today to learn more via our online contact form or call (605) 376-6780 to speak with a Sioux Falls REALTOR.