If you’re getting ready to sell your home, you should know that there are costs awaiting you on every step along the way. You can foreseen some of them, but there are also some other costs you may haven’t thought of yet.
We want to help, so we’ve prepared a list of what we think are unforeseen costs, to help you out do the math properly. And make more money at the end of the day. Let’s roll…
You may have left your home, but that doesn’t mean you should stop paying your utility bills. Any potential shopper will dislike the fact that your home feels like no person lived there for some time.
You will want to keep some lights on, as well as your A/C during the humid days to keep your home mold free; cause mold equals hard sell or no sell at all. In addition, working A/C makes sure that the air inside the home circulates and is filtered.
And the same goes for water, you’ll want to keep it running even if you’re not around. Just imagine yourself coming to a house with no running water. Would you buy it? I don’t think so.
So yes, you will have to pay for utilities even if you don’t use them. To cut down on those costs, however, you are best off contacting your utility providers and coming to an arrangement with them. You’ll want to explain your situation and how you won’t be using many of their services, hence you want to lower their bills. In some cases, they will understand — but even if they don’t understand (don’t want to give you a discount), you will have to keep paying for their services. That’s just life.
2. Repair and renovation
You should repair all — or at least most of — the things that need to be repaired. Sure, you can leave that to the future owner, but be prepared for them asking you to lower your price because something doesn’t work.
And again, the same goes for renovation. See if you can repaint any, if not all, walls and other stuff that could use a fresh dose of paint. One more time, this will increase your chances of selling your home even in the times of recession, or allow you to ask a little extra during the boom days.
3. Staging costs
We find staging very related to the previous point of repair and renovation, as it too strives to make your home look better.
You can do it for yourself or hire a pro. In either case, you should be prepared for additional costs like flowers and a number of details that will make your house look more appealing in the eyes of the buyer.
Furthermore, in this tech age we live in, staging is also done in the digital world, with professionally prepared photos and perhaps maybe a video designed to attract buyers. Even seasonal agents outsource digital staging to third parties, and if they don’t specifically ask for that cost — chances are they have included it in their fee (which will consequently be higher).
Real estate agents are in it for the money. Typically they charge 5-6 percent of the home’s agreed upon selling price. That money is then split between the seller’s agent and the buyer’s agent.
You can negotiate with agents, but only to a certain extent. If they don’t make enough money from your home, they will pitch other homes, instead. Cause they get to earn more money selling those other homes. Something to think about before starting negotiations with any agent.
5. Seller credits to buyer
Cash-strapped buyers may request seller credits to cover additional expenses related to the house purchase, like closing costs or escrow fees. According to the National Association of Realtors (NAR) estimates for 2016, some 37 percent of sellers offered incentives, such as seller credits, toward remodeling or repairs to attract buyers.
Nothing wrong with seller credits as long as you budget them. If you’re unprepared, on the other hand, those extra few percentage points could hurt your math. So be prepared, especially if there’s work left to be done on your home renovation (for instance).
6. Capital gains taxes
Uncle Sam wants you to own a home and will even offer you tax incentives to help you buy one. He, however, doesn’t want you to flip homes — at least not too often.
If you’ve owned the home for at least 2 years and used it as your primary residence during the last five years leading up to the date of closing, you won’t have to pay capital gain taxes up to $250,000 or $500,000 if married filing jointly. The situation changes if your home is worth more than those two figures or if you wasn’t around enough, when you can’t get away without paying taxes.
Yes, there is more, but these 6 are those that matter, we think. For instance, there is also title insurance which ranges from a few hundred dollars to $2,000, and which aims to protect real estate owners and lenders against loss or damage that can occur due to defects in the title on a property.
Moreover, you will also face moving costs, but that — I guess — comes as given.
Or we may’ve missed some other cost? Do let us know if you had to pay something else we haven’t mentioned in this article. Use the comments form below for that… Thanks.
And before you leave, you may also want to check out this guide: Sell Your House In Just 7 Days (without a real estate agent).