Unexpected Costs of Selling Your Home
How much does it cost to sell your home?
Selling your existing home to move to a new one can be very exciting. However, it can be expensive- and you need to be prepared for the some unexpected costs. Read these tips to get clarify on the costs you’ll incur when you sell your home
Closing Costs
Most people know they have to pay closing costs as a buyer, but as a seller, you will have some to pay too.
In addition, you’ll have to pay escrow expenses, as well as a pro-rated amount of property taxes and possibly homeowner’s association fees. These costs are often unexpected, if you’re on the selling end of the transaction.
Realtor Fees
When you sell your home through a realtor, they will charge a fee which is usually about 6% of the selling price. Your realtor may then split the fee with the buyer’s agent. You can sometimes negotiate a lower percentage, but the realtor may be less involved, and that can make it harder to sell your home.
Taxes
Not all cities or states will charge transfer fees, but where they do you can expect to pay a small percentage of the selling price. The average transfer tax in the US is $750.
If the house you are selling is a rental property (and not your main residence), you may need to pay capital gain taxes on the profit. In many cases, the gain recognized on your primary residence is not taxed, if you buy another home with the sales proceeds.
There are many 1031 exchange properties for sale, but for this to work, there are guidelines and rules you have to follow. Seek professional tax advice before you enter into a property transaction.
House Staging
Staging your house for the buyers market can cost anywhere for a few hundred to a few thousand dollars, depending on how much work you need to do, so you will need to factor it into your finances. There could be painting inside and out, carpet cleaning and some repairs. A house has to be in good condition if it is going to sell quickly and the staging to show it off can be vital.
Title Insurance
If there is anything not quite right with the title to the house, the buyer is entitled to title insurance. The seller typically has to pay for the insurance, and the premium is typically between $750 and $1,000.
Utilities
You’ll have to pay the final utility bills when you move out, so that no balance remains when you leave.
Attorneys Fees
A real estate attorney is not always needed, but if they are you can expect a bill of around the $1,000 region.
Be Ready
These costs can mount up, and unless you are going to have enough cash proceeds from the sale of your house, you will need access to other funds to cover these expenses.
You also have to consider the cost of the actual move. Moving companies generally make the whole experience easier, but their services do not come cheap.
This post is for educational purposes only.
Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
Co-Founder: accountinged.com
(email) ken@stltest.net
(website and blog) http://www.accountingaccidentally.com/
(you tube channel) kenboydstl
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