Hidden Costs of Selling Your Home
Are you thinking of selling your home? If you are considering moving, either to a smaller home, a larger home, or to a new location, there will be many costs that you will face when selling your home–some that are obvious, but others that may take you by surprise. A little research in advance can prevent you from being surprised later, when you’ve already committed to moving.
First, and most obvious, if you are using a real estate agent to list and sell your property, there’s a fee you will need to pay when the home is sold. Those fees do vary by state and region, but expect to pay 5 percent to 7 percent. While most listing agents split the fee with the real estate agent that is brought in by the buyer, the seller generally pays the whole fee, at the time of settlement.
You’ll also need to pay a lawyer, who will help prepare the purchase and sale, as well as the closing documents. Legal fees vary greatly by law office, so it’s definitely beneficial to do some shopping around. Consider obtaining recommendations from friends, relatives, and co-workers. While the lawyer may give you an hourly rate, ask how much a standard closing usually costs.
Depending upon the condition of your home, as well as the housing market in your area, you may need to make some major or minor home improvements, prior to putting it on the market. Your real estate agent can help make recommendations that will help show the house in its best light. These improvements can range from something simple, like planting flowers in the front, to larger changes, like painting the home.
Before proceeding with selling your home, review the terms of your home loan to make sure you don’t have a prepayment penalty provision in your mortgage. Prepayment penalties, which usually decrease as a mortgage ages, require that you pay a penalty if your mortgage is paid off prior to a stated date.
Once you receive an initial offer for your home, and after your prospective homebuyer completes their home inspection, you may be asked to make some improvements to the home, prior to the closing. While you are given the option, if you choose not to make the changes your prospective buyers can decide not to purchase the home. Make sure you budget for some of these additional improvement charges, so that you can sell your home with no issues.