The real estate market has made quite a recovery from the recession lows. Home values have been steadily increasing for a number of years. Now is a great time to sell your home depending on which market you live in.
Selling a house isn't a cakewalk like some might imagine. It takes a fair amount of effort on the seller's part, even with a realtor. For instance, you must schedule repairs that are needed before listing the house. Then you also have to pay for any repairs that might be needed after a home inspection. Don't forget about realtor commissions.
Below I will go into the four potential cost traps of selling a home and how they can impact your bottom line.
- Realtor Commissions: While this may seem like an obvious one, it is one of the biggest if not the biggest expense you will have when selling a home. In most cases, the seller is responsible for paying the commission of not only their own agent (selling agent) but also the buyer's agent. On average, commissions tend to be around 3% for each agent, so you are looking at around 6% of the sale price going towards realtors.
- Repairs/Maintenance Before Listing the House: When you first meet with your realtor, he or she will typically do a walkthrough of the home with you and advise you of any obvious repairs or maintenance that needs to be done before listing the home. Sometimes this can be as easy as painting the walls a more neutral color. Other times it can be more complicated such as repairing leaks or noticeable cracks, or foundation issues.
- Repairs Needed After Home Inspection: More often than not, a home inspector is going to find something wrong with the house. It could be minor, it could be major. Either way, unless you are selling the home in 'As Is' condition, you will more than likely have additional repairs to make before closing comes around.
- Potential Taxes: While selling your home can be a potentially profiting venture, there could be fees you have to pay that far exceed that of a realtor's commission. If you are selling property that has been labeled as an investment, prepare to pay taxes. The IRS recognizes gains on the sale of a property as capital gains. It will carry around a 15% tax on the difference between the purchase price and the selling price of the property.
So there you have it. While selling your home can be an adventure of its own and a symbol of moving on to bigger and better things, there are many costs associated with the process. Being familiar with these potential expenses before you decide to list will remove any element of surprise you might have.
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