Don’t be caught offguard by the hidden costs of selling
Selling a property can be a very profitable time for a homeowner. By improving the home, building up equity through regular mortgage payments, and selling at an opportune time, they can receive an offer which is considerably higher than any outstanding balance on the mortgage.
Homeowners may be more likely to consider selling now, when the values of many properties have skyrocketed. According to the National Association of Realtors, median home prices in the United States have experienced annual growth each month for more than six years.
However, selling a home isn't as simple as pocketing the proceeds once an offer has been finalized. Anyone listing a home should also be aware of the hidden costs which can either rack up some expenses prior to a sale or leave you with less of a profit than you might expect.
One often overlooked expense in selling a home is preparing the property for sale. This process may involve considerable work, such as replacing an aging roof or installing updated windows to make the home more appealing to buyers. These improvements are often expensive, and you'll typically only recoup a portion of the costs through the added resale value. Daniel Bortz, writing for the Realtor.com, says you'll want to make a list of any areas in your home that need repairs. If you don't want to address the issues, you may need to lower your asking price to better attract buyers.
Even if your home doesn't need substantial structural upgrades or repairs, you might still need to invest in a number of other services. Skylar Olsen, writing for the real estate site Zillow, says these could include painting, landscaping, or cleaning.
If you are selling a vacant home, or if you're not satisfied with how your furniture and belongings are laid out, it can be helpful to get the residence staged. Maurie Backman, writing for the financial site The Motley Fool, says showing how a new owner could use the rooms might help attract buyers and shorten a property's time on the market. However, a professional staging company can easily cost hundreds of dollars. Even if you opt to stage a home yourself, you may need to rent furniture or other items for this purpose.
Photographs are often a crucial way to get a buyer's attention, and they'll be less likely to ask for a showing if the images are blurry, dark, or otherwise of poor quality. Bortz says a professional photographer will avoid this problem, but can add to the costs of selling the property. If your real estate agent offers to take photos, check out their listings to see if you'll be satisfied with their work.
There are a variety of closing costs on a sale, and these can deduct thousands of dollars from the sum you receive for your home. Expenses include a number of taxes and fees, such as transfer taxes and escrow fees. Other costs include your remaining share of the property taxes and a prorated share of some utility bills.
Even if you've moved out of the home, you'll still want to keep paying for the utilities on the property listed for sale. Buyers are less likely to enjoy the home if it is not adequately heated or cooled. During the winter, neglecting the utilities can lead to burst pipes and property damage.
The buyer is typically responsible for some of these closing costs. However, sellers may want to offer a credit toward closing costs or even pick up the tab entirely. Amanda Bell, writing for Angie's List, says this offer can help close a deal in markets where buyers have the greater advantage.
Real estate agents depend on commissions for part of their income, and some of the proceeds from the sale will go to them. The commission, which is usually between 5 and 7 percent of the purchase price, is divided between the buyer's agent and listing agent.
Other incidental costs can also add to the expenses of the sale. When the proceeds from the sale are used to pay off a mortgage, you may need to pay a modest courier's fee if the payment needs to be personally deliv-