You may get the idea that selling your house would mean reaping lots of cash, but it is good to be reminded of the costs that you still have to settle as a seller before you start making plans on what to do with your estimated profit. Several factors can affect the cost of selling your home. It would be wise to factor in these costs beforehand so that you can have a precise estimate of your profit come settlement.
As a seller, you should also clarify with both your agent and the buyer's agent which fees are customary and which are not. Here are the standard fees associated with selling a house:
1. Realtor's commission – While this fee is negotiable and varies within markets and property values, it usually takes a big chunk off the selling price, generally amounting to 5-6% of the sale cost. Some arrangements may require you to pay a flat fee, where you and the agent will agree on a fixed price for the sale of the house no matter how much the property sells for. Take note that this fee is split between your agent and the buyer’s agent.
You may opt not to hire an agent to sell your house, but keep in mind that the realtor’s responsibilities would cost you money and much of your time, too. Professional agents would also have better access to information on your market and contacts to prospective buyers.
2. Closing costs – This string of fees could be split between the buyer and the seller based on agreements from both parties, but you can expect to pay 6-10% of the house’s sales price upon settlement. Closing costs for sellers vary according to where you live but what the seller usually shoulders are the title transfer fees, notary fees, and escrow expenses. The closing costs could also include outstanding balances from property taxes and mortgage fees. You may also need to pay for a prorated share of the water and sewage bills. It is worth to take note that – unless you are selling with very low equity -- payment for closing costs will not be coming directly from your pocket but would instead be deducted from the profit of selling your home.
3. Home repairs – For your house to have a high market value and to look appealing to buyers, you may want to present your home for sale in its best condition possible. Do not skimp on repainting and having a second look on the functional spaces of the house (such as the kitchen and bathrooms) if ever something needs repairing.
4. Inspection fixes – If the buyer’s home inspection detects major faults in your house such as sewage leakage and roof issues, you have to be ready to cover these costs.
5. Marketing – Your agent may recommend a marketing campaign that includes online listing and physical posters. You will have to pay for these costs which include professional photography, the creation of a floor plan, and press advertising.