What Fees Do You Pay When Selling Your Home?
When you’re selling your home, there is a range of fees that you are required to pay. Some are collected by the government, and some go to the professionals who help you carry out all the steps of the home selling process. Some fees and costs are negotiable, while others aren’t. Here is a list of common fees and costs associated with selling your home.
Real Estate Commission
As the seller, it is customary that you pay the commission fees for both the seller’s agent and the listing agent. The average real estate commission is 5.8% of the property sales price.
The commission pays for the agent’s assistance in marketing your home, negotiating the sales price and other aspects of your sales contract, coordinating with other parties involved in the sale, among other services.
The commission can vary depending on the agent. However, keep in mind that the lowest price doesn’t always pay off in the long run. An experienced agent can help you sell your home faster, and for more money, which can easily make up the difference in commission prices.
As the seller, you aren’t required to hire an inspector during the home selling process. However, agents will often recommend that you hire your own inspector to look for structural, mechanical, or other issues so that you’re not blindsided by these issues if a potential buyer hires their own inspector.
An inspection could cost around $400 or more, depending on your location, the size of your home, and other factors.
Chances are you will be making at least a few minor repairs to your home to get it into selling shape. According to Zillow, 73% of home sellers in 2019 made at least one major repair to their home before selling. The costs of repairs could vary, depending on what the inspector finds in their report.
Statistics show that staging your home can help it sell quicker, and for more money. So, depending on your situation, it could be beneficial to spend a little extra money on staging. Painting walls a natural color, hiring a professional cleaner, hiring a staging company, installing brighter lights, and making cosmetic repairs are all costs associated with staging your home.
“Closing Costs” are the various fees associated with transferring ownership of your home. Common costs include attorney or title company fees, title transfer fees, and taxes. If you’re selling your home, don’t be surprised if the buyer asked you to foot the bill for some of their closing costs. On average, sellers can typically expect to pay 1-3% of the sales price in closing costs, according to Realtor.com.
Capital Gains Tax
If you sell your property for more than you bought it for, then it is considered a capital gain and you might be required to report it on your federal tax return.
However, many homeowners are allowed to exclude up to $250,000 of profit on their primary home ($500,000 if you’re married and filing jointly.) You also must have lived in that home for at least two of the previous five years, and you are not allowed to use the tax break if you’ve already used it on another home sale within the past two years.
If you’re thinking of selling your home, it’s never too early to get started! In fact, according to a Zillow survey, not getting started on the process sooner was the biggest regret for sellers in 2019. Even if you’re not ready to get started quite yet, it’s never too early to reach out to your local lender and agent for advice.
This is not a commitment to lend. TowneBank Mortgage is not a tax consultant. Contact your tax advisor for more details.
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