Home sellers have plenty to do. They need to have their home listed, advertised, and marketed. Many sellers are getting their houses ready for sale while simultaneously researching other properties and neighborhoods that they’d consider living in.
It’s nice to think about the money that you’ll receive from selling your home, but it isn’t all profit. There are some costs that sellers need to pay during the process. The exact amount and types of expenses will be different for every home sale transaction.
Selling a home in California will take time, even if you have a motivated buyer. The entire process may not be completed for several weeks or months. There are specific steps that need to be taken, and there will be certain people that become involved along the way. You should still be able to achieve your goal of selling your home. Patience, determination and a proactive game plan can help you succeed.
Here are some of the most common costs that sellers pay while selling their homes:
1. Realtor commissions.
Real estate agent commissions are usually one of the most expensive costs for home sellers. Realtors handle paperwork, schedule open house showings, list and market your property and perform many other duties. Realtor commissions are usually anywhere from about three to six percent of the sale price of the house.
Commissions are typically split between the buyer’s agent and the seller’s agent. If you’re concerned about this expense, you may ask your agent to see if they would take a lower commission amount or rate. You could also put your home up for sale by owner. Just keep in mind that you’ll still need to pay the sales commission for the buyer’s realtor if you go this route.
2. Seller concessions.
Some sellers may make certain concessions to the buyer so that the home can be sold. A seller may pay for certain charges for the buyer, such as title fees, inspection costs or other items. Some concessions may be offered to help buyers offset part of the purchase or if the seller needs to move in a hurry due to a change of employment, a family emergency or other situation.
Seller concession amounts will vary depending on the individual circumstances. Most concessions are usually around one to three percent of the house’s sale price at most.
Home buyers may also be limited on the dollar amount of concessions requested due the requirements from their mortgage loan. Concessions for VA and FHA loans have respective maximums of four and six percent. Some Fannie Mae loans have concession caps of three, six or nine percent.
3. Repair, upgrade and renovation costs.
Renovation, upgrade and repair costs are another key bargaining point in home sales. It’s not uncommon for some purchase agreements to fall through because work either hasn’t been done or the seller and buyer weren’t able to agree on which party would pay for them. The seller can pay for those items, the buyer could take on that responsibility or both parties could agree to divide the expenses evenly.
These expenses can differ greatly from one house sale to another. It really depends on what needs to be done. Replacing a few faucets or an appliance or two may run a few hundred dollars. Renovating a deck or attic and replacing a heating and/or cooling system may cost several thousand dollars at a minimum.
4. Staging expenses.
You can also hire professionals to stage your home so that it’s more appealing for prospective buyers. Decorations and furniture will be arranged to draw attention. Stagers usually take photos and videos of the interior and exterior of your house to help it stand out.
Staging your house may cost a few hundred to a few thousand dollars, depending on what’s done. You can also stage your home yourself. You may want to spend some time cleaning closets and donating or selling items that you no longer want or won’t take with you when you move. Remember to keep all personal photos and other potentially sensitive information out of sight.
5. Landscaping costs.
When you’re preparing your home for sale, don’t forget about your lawn and garden. Mowing and fertilizing your lawn, trimming bushes and hedges, and planting flowers will make your property more visually appealing. It can also add resale value.
The amount that is spent will vary according to how much or how little work you do. Planting trees, adding new plants, weeding and pruning, and laying down new sod or reseeding some areas of your lawn may run into the thousands of dollars. Minor changes such as pruning, mulching and regular lawn maintenance may only cost a couple hundred dollars or less.
6. Closing costs.
Home sellers are also required to pay certain closing costs. This includes any applicable transfer taxes, attorney fees, and recording fees, and the closing fee. The closing fee is generally paid to your closing or title agent.
You may have to pay a prorated portion of your property taxes before the sale has been completed. You should be able to receive that amount from your county assessor or other respective local government offices. If you live in a townhouse or condominium association, you will likely be charged a prorated portion of your association dues. Most association dues are paid monthly, quarterly, biannually, or annually.
The association should be able to supply you with the prorated amount that will be due. You will also need to pay off your remaining mortgage balance if it hasn’t been paid already. Your lender can provide you with a loan payoff amount. Take a few minutes to read your loan contract carefully to determine if there are any prepayment penalties or other associated fees. The loan payoff amount will be subtracted from the home sale proceeds.
After the closing has been completed, the buyer will receive the keys to their new house and you’ll receive payment for the net proceeds. You may want to save that money or put it towards the purchase of another residence or big-ticket item. Whatever you decide, you can put the sale behind you. It’s time to look forward to beginning the next phase of your busy life in a new location.
📞 Have Questions? Ask The Chris Eckert Real Estate Team
Give The Chris Eckert Real Estate Team a call today at 650.627.3799 to learn more about local areas, discuss selling a house, or tour available homes for sale.