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. 

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.