Selling a home is one of the most lucrative transactions a person makes in their lifetime. However, before you go spending the entirety of your windfall before the ink dries, there are some costs you should understand.
During the selling process, consumers must leap through several legal and administrative hoops, make intelligent decisions about maximizing their potential paycheque, and crowd their corner with professionals. Each of these necessary steps requires some cost on your part. Below, explore a breakdown of common home-selling costs to work into your calculations.
Realtor Commission
Excellent realtors, like the ones at Harvey Kalles Real Estate, are worth their weight in gold. They steer you through the transaction process, orchestrate a multi-channel marketing approach to drum up interest, qualify the best prospects for your property, fight for you during negotiations… the list goes on.
For their tireless work, they receive a commission – typically around 5%, which they split evenly with the buyer’s agent. Using this commission rate as a benchmark, a seller parting with a $500k home can expect to pay $25k in commissions. While that might sound like a lot, consider recent studies that show that “agent-assisted listings tend to sell for nearly $100,000 more than “for sale by owner” homes.” Finding an excellent realtor doesn’t just make the process more seamless – it’s a smart money move.
Legal and Closing Fees
In many places, a lawyer is required by law for closing. Even in places where they aren’t needed (or where a notary will do the trick), retaining a professional lawyer can still be advantageous.
Basically, a real estate lawyer ensures that the transaction complies with all applicable laws and regulations. They review and prepare documents, conduct title searches, and oversee the closing process to protect your interests. The cost of a real estate lawyer varies widely, even in a single market, but you can expect to pay somewhere between $1,000 and $2,500.
Please note that as you close the sale with the lawyer, you will also be expected to pay prorated, outstanding property taxes (if there are any).
Cleaning, Repairs and Upgrades
As you discuss strategies with your realtor, they may suggest professional cleaning or upgrades. In most cases, these measures have a high ROI (meaning you’ll recoup the costs and then some). Still, working these into your existing selling budget is worthwhile since you will accrue these costs before you see any money from the transaction.
The cost of cleaning, repairs and upgrades also varies enormously, depending on the scale of the projects, the current labour market, and the timeline for completion.
Moving Expenses
Lastly, no seller’s budget is complete without setting a small sum aside for moving. While you can theoretically move on a shoestring budget (with a pick-up truck and a day off work), consider that real estate closing/possession dates are a hectic time in a seller’s life. Forking over a few hundred dollars to alleviate the pressure of moving is an investment in a stress-free transaction.
Before you sell, work these essential costs into your budget to avoid surprises. Find the best realtors in your area, the finest lawyers, and the most reputable movers to help make the transition as seamless as possible.
