When you were a first-time homebuyer, you were probably surprised by the total amount of fees and closing costs. Are you familiar with the costs on the selling side?
A recent study from Zillow and Thumbtack calculated the average costs of selling a home both nationwide and in specific markets. The national average is $20,851, which is enough to make a down payment in many markets. The average costs of selling a home vary based on location, with cities ranging from the average $13,704 in St. Louis, MO, to a staggering $83,770 in San Jose, CA.
Home prices drive the difference between markets. Most of the costs – $14,281 of the $20,851 average – are real estate agent/broker commissions and state transfer/sales taxes, both of which are percentages of the home's sale price. The remaining costs are mostly associated with home preparation. Between exterior and interior painting, home staging, carpet/house cleaning, and lawn care, sellers paid a bit over $6,000 on average.
How can you limit the costs associated with selling your home? Consider the largest seller-based closing costs – agent commissions and state transfer taxes.
Taxes are fixed and non-negotiable. You can consider negotiating your real estate agent or broker's commission but do so carefully. Is someone who's willing to work for much less than the standard 6% willing or capable enough to do the best job of selling your home? Research your local market to see if the competition is fierce enough to give you negotiating power.
You can sell your home directly and bypass commissions entirely – but be sure you have the time to show the home to prospective buyers and a full understanding of all the paperwork and requirements for selling your own home. You may end up paying more in the long run through failing to price and stage your home properly or making critical paperwork errors.
Every aspect of the home sale should be considered through return on investment. The cheapest option is not necessarily the best, nor is the most expensive one. MoneyTips is happy to help you get free mortgage and refinance quotes from top lenders.
Generally, you should focus on the basics that make a home attractive to a buyer and safe in the eyes of a home inspector. Your prospective buyer may or may not find your bathroom addition or new deck appealing. However, everybody cares about roof damage, peeling paint, dripping faucets, mold, and general signs that a home hasn't been maintained.
Basic repairs are essential, and simple touches will add to the effect. Keep yards well maintained. Make sure your home is clean, uncluttered, and free of unpleasant odors. A new coat of neutral paint can help show your home as a blank canvas for the new owner's style. However, proceed with caution on any further improvements.
According to Remodeling Magazine's 2019 Cost vs. Value Report, no major remodeling steps allow full recouping of costs on average. Backyard patios only recoup 55.2% of costs, while upscale bathroom additions only recoup 58.1%. The highest return on investment was for garage door replacement at 97.5% of costs. Your market and neighborhood may be different – for example, a deck or a pool may be an entry-level requirement in your location – but keep larger scale projects in the context of difference in eventual home sale price.
A successful home sale requires planning and hard work – and there are costs associated with those efforts. Be realistic about the efforts you can handle on your own and realize when you need help to get the best return on your home sale. Undertake cost cutting with the big picture in mind. Don't let ignorance or excessive pride cut into home sale proceeds – or scuttle the sale entirely.
People with higher credit scores get lower interest rates on their loans, mortgages, and refinancing. You can check your credit score and read your credit report for free within minutes by joining MoneyTips.