Expenses as a Seller
February 25, 2016
Some homes might call for extreme improvements, but most homes only require some mild work plus some touchups. Here are some of the expenses to expect.
Painting is generally one of the most obvious improvements a homeowners knows they can make. Color choices are equally as important as a new paint job in itself. Without the proper paint color, or fresh paint in general, a buyer will equate those costs with more money they have to spend. A bold, or dark paint color can also make a room look smaller. It is important to consider toning colors down, and using neutrals when painting your house. You can also save some money by doing some of the painting yourself, as hiring painters can equate up to a few thousand dollars.
Clean window panes make a huge difference when a buyer is considering a home. To a homeowner, they may not realize how much money this can cost in itself just to clean them. Hiring someone will cost a few hundred dollars, depending on the size and height of your home.
Touchups should be left for the buyer to handle is a separate discussion in itself. But there’s practically no house that couldn’t use some quick maintenance to make sure it looks well-cared for and leaves fewer items for a home inspector to comment on.
Many buyers do not have the creativity to imagine a home decorated. Having a decorator help declutter, reorganize, and in some cases refurnish it after you’ve moved your stuff out, can help impress buyers in a big way. In fact, studies show that buyers pay more for staged homes. Expect to pay a professional stager a few thousand dollars for their services.
Be prepared to put some money into accessories and necessities. It is important to buy fresh flowers, a clean doormat, clean towels for the bathrooms, or hanging some artwork.
Landscaping is very important when a potential buyer views your home. Sometimes, it will require hiring a landscaper. If the yard is not so bad, you will be able to buy flowers and plant them yourself. However, sometimes it might be necessary to plant new grass. You should have flowers pruned, the yard cleared of any leaves, or any general weeding.
Having a professional inspect your house isn’t required. Buyers expect to pay for their own inspectors, and in fact will probably want to hire ones they know and trust regardless of whether you’ve had the property inspected first.
If you’ll be moving out before putting your house on the market, you can expect to pay higher in utilities than you generally pay when you are living in the home. This is because it is important to leave the lights and heat/air on in the home, as your agent can sometimes have a buyer that will stop by right away. It is important to have the appropriate air temperature setting for the season, the lights on, which makes the house appear nicer.
Expenses to Expect at Closing
Although most of what you pay at closing time comes from the sale proceeds, the closing costs are where you really lose money.
1. Real estate agent commissions. As the seller, you will be paying the entire 5-6% commission to split between your agent and the buyer’s. There are ways to reduce this figure.
2. Other closing costs or credits to the buyer. Sometimes you can agree in negotiation to pay various of the standard costs associated with closing the deal, such as fees for the escrow company; the mortgage and home appraisal; recording and transfer of the property; homeowners’ and title insurance.
3. Transfer tax. Your city or state may require you to pay transfer taxes, as a small percentage of the sale price.
4. Home warranty for the buyer. Many sellers buy a home warranty on the buyer’s behalf. This is a service contract that covers repairs to appliances and certain systems within the house for the first year of ownership. It will cost about $500.
5. Capital gains tax. If you earn less than $250,000 on your home sale, you won’t owe a thing in the way of capital gains taxes. But if you earn more than that, you’ll want to look further into the matter. Once you’ve subtracted things like the costs of preparing the property for sale from the supposed gains, you may not owe the tax.
6. Moving costs. Depending on the size of your house, you may need to consider hiring a moving company packs your boxes for you, transports them to the new location, and unpacks at the other end. This can be very costly, and is another expense to consider.
Here’s a great video to check out about Understanding Mortgage Closing Costs, as well as an article on Quick Cosmetic Touch-Ups Increase a Home’s Face Value.