Selling Your Home: What Costs are Involved?
If you are thinking about selling your home, you may see dollar signs. Because of a booming real estate market, many homeowners who have owned their property for more than a couple of years may have substantial equity built into their property. By selling your home, you can pull this equity out and turn it into cold, hard cash. However, selling your home is not without its costs. It is important to understand and estimate the costs associated with selling your home before you finalize the decision to move forward with this plan.
Repairs and Make-Ready Expenses
The average home buyer who is purchasing a used home understands that the home has been lived in, and they certainly do not expect the home to be in like-new condition. However, they also do not want to assume a laundry list of deferred maintenance items because the current owner failed to keep up with repairs and maintenance issues. They also do not usually want to purchase a home that will need costly replacements of major components soon, such as the HVAC system or water heater. It is wise to follow basic make-ready steps on your home before selling your home. This may include painting the walls a neutral color if necessary, updating light fixtures to modernize the home, replacing broken components, and more. If your home has very old systems, such as a cooling system that you have been nursing along for the past few years, replacing it before moving may attract more buyers. Your total expense for repairs and make-ready may vary based on the condition and age of your home.
Staging your home is not a necessary expense, but it can make your home more attractive and desirable to a potential buyer when selling your home. With this in mind, it can help you to attract more attention and potentially more buyers to your home. You may work with a professional stager to achieve beautiful results in your home. Staging fees can vary, but you may expect to pay a few hundred dollars for a consultation. If you need to purchase or lease furnishings and décor, you may expect to pay several thousand dollars for this benefit.
Landscaping and Yard Maintenance Fees
Curb appeal is critical when selling your home. It is common for homeowners to power wash the front surfaces of the home, such as the garage door, patio, and walkways. In addition, adding fresh mulch and new flowers to the flower beds can improve curb appeal. You may even pay to replace the front door and door hardware for added benefit when selling your home. Keep in mind that the yard should be kept mowed and edged and that the flower beds should be weeded frequently while the home is listed for sale. Some homeowners will tackle this project on their own for minimal cost, and others may pay a landscaping company to do the work for them for a monthly fee.
Third Party Reports
In many cases, the buyer will pay for all of the third party reports. These reports may include a property inspection, appraisal, termite inspection, and more. However, there are instances when the seller may purchase these reports before listing the home for sale. For example, if your home is very old and you are concerned about its condition, you may purchase a property inspection and make repairs to address some of the most glaring repair issues before selling your home.
Buyer’s Requested Repair Costs
When selling your home, you should prepare for several rounds of negotiations between you and the buyer. A buyer may commonly negotiate for aesthetic repairs and maintenance tasks to be completed when making an offer on the home. For example, the buyer may ask you to repaint the home or may ask for a painting allowance if you have not returned the walls to a neutral shade yourself. The buyer may also negotiate for more significant repairs to be completed after he or she has reviewed the property inspection. For example, if the inspection notes considerable damage to the roof, the buyer may ask you to replace the roof.
Title and Recording Fees
Title and recording fees are required for all real estate sales contracts. These fees include title insurance on the property, which is usually required by the lender. They also include tax filing fees, recording fees and more related to the transfer of ownership to the new owner. Altogether, these fees may cost a few thousand dollars, but the amount varies based on the size of the home and its location. The buyer usually will pay for these fees, but there are instances when the buyer’s offer asks the seller to pay for them.
Pro-Rated Property Taxes
As a property owner, you are required to pay the property taxes for the amount of time you lived in the home. For example, if you sell the home in June, you may be responsible for paying for six months of property taxes on the home. If you have an escrow account established with your current mortgage company, the escrow funds may pay for this. If you pay for your property taxes out of your own pocket, you may be required to pay the pro-rated property taxes out of the net proceeds from the sale of your home.
Real Estate Agents’ Commissions
When selling your home, it is also customary for the seller to pay for the commission for both the buyer’s and seller’s real estate commissions. The amount of the commission may be negotiable, but who pays for this fee is typically not negotiable. You may choose to avoid hiring a real estate agent to list your home, but you will miss out on the very real benefits that an agent’s services provide. Even if you do not pay for your own agent to represent you, you may still have to pay for the buyer’s agent fees.
As you can see, selling your home does have its costs associated with it. These costs may be combined with moving expenses as well as costs related to the purchase of your new home. It is important to review all numbers carefully so that you are financially prepared for this monumental event. Contact Evergreen Properties and Investments to learn more about how these expenses relate to you and to discuss listing your home for sale in Long Beach, California.
From the Author: My name is Dan Barcelon and I believe that Real Estate can be one of the most valuable assets you’ll ever own. I’m dedicated to educating and guiding my clients on how to manage and leverage their homes to create an Evergreen legacy for themselves and their family. I primarily consult both home buyers and home sellers on reaching their personal and financial goals through Real Estate in the following cities of Southern California: Long Beach, Carson, Cerritos, Signal Hill, Torrance, Lakewood, Cypress, Downey, Bellflower, Norwalk, Wilmington, La Palma, and Artesia.
If you’d like to discuss if buying, selling, or investing in real estate is right for you at this time, feel free to reach out. You can call/text me at 562-270-5812, or you can e-mail me at danb@EPIrealestate.biz.