Ready to put your home on the market? Remember – selling a home costs money too.
There are obvious costs such as commissions to the listing and buyer’s agents, but there is also a variety of smaller expenses to factor in.
Here are some hidden closing costs to be aware of :
Repairs
If you’ve let your home’s maintenance lapse, you may need to hire a handyman or general contractor to get your home ready to put on the market. If you cheap out, buyers are most likely going to catch those during the home inspection. You’ll also wind up paying more money than if you hired a handyman to begin with. Walk through your home, and make a list of noticeable problem areas that are worth fixing. If buyers see small issues, they can assume there are bigger problems beneath the surface. In terms of making major repairs, you’re probably better off lowering the listing price or giving the buyer a credit at closing, instead of doing the work yourself.
Professional photographs
Four in ten home buyers start their search by looking at properties online, especially the photos. There, it’s worth paying for a professional photographer. While the cost varies by area and size of your property, you can expect to pay $500 to $1,000.
Landscaping
Curb appeal is what gets the buyer in the door. Improving your landscape can raise your home’s value by up to 12%. While prices vary, the average cost of a full-on landscaping job is around $3,000. That said, you can save on those costs by doing some of the work yourself.
Staging
Buyers need to be able to visualize what it will be like living in the home. That’s where staging comes in. You hire a professional to arrange furniture and other homes in the home to make it more appealing. Staging services and prices range widely, but the median costs is about $700. Staging increases the home’s price that buyers are willing to pay by up to 5%.
Utilities
If you’ve already moved into your new home, you’ll want to keep the electricity on while your property is on the market. No buyer wants to walk into a hot or cold house, or a house that is pitch black. Also, if you turn off the air conditioning in the summer, you’re putting your home at risk for mold.
Capital gains taxes
If your home has appreciated a lot, you may have to pay capital gains tax. This tax is based on the difference between your home’s purchase and selling prices, minus the value of documented improvements such as an addition. So, if you’re in a hot market and your profits are substantial, Uncle Sam may take a small chunk when April rolls around. The good news is, this rule comes with substantial exemptions. If you’re selling your primary residence as a married couple filing taxes jointly, you can exclude up to $500,000 of profit from the sale of your home ; if you’re single, its $250,000. Talk to your accountant for more information.
Closing costs
Closing costs will likely be your second-biggest expense behind commission fees. You can expect to spend roughly 2% of your home’s sale price. The buyer typically chooses the closing company, and closing costs tend to be fixed, including transfer taxes, mortgage processing fees, escrow fees and notary fees. You’ll also pay at closing any outstanding property taxes, a prorated share of the water and sewage bills, and the remainder of your mortgage.
