You want to sell your house or maybe you are just thinking about it. Perhaps you want to downsize or you are tired of all the time and money for upkeep. Maybe you inherited a house and you don’t know what to do with it and all the stuff that’s still in there. You might be a bit behind on payments and you are in pre foreclosure or have already gotten a foreclosure notice. Whatever the reason: you want to sell your house.
Most people do a little research (like log onto zillow.com) to see what their house might be worth and throw it on the market. That’s all fine and dandy, but have to make sure to take into consideration all the costs that are associated with selling the house. I hope to shed a little light on that subject for you.
There are usually two big costs associated with the sale of your house. The biggest that you might not have considered is preparation. If the house is older and you would like to get the most money out of the sale you will have to update it. If you don’t you will not be able to get the maximum sale price. Why? Because unfortunately most home buyers have no imagination.
They see the outdated kitchen or bath and pass on your house. Even if it’s just the paint and carpet that are outdated, selling your house will be a challenge. If you find that hard to believe all you have to do is watch one of those house hunters programs on HGTV and listen to an entitled buyer as they reject a house because of the paint color.
Updating your house before selling doesn’t have to cost an arm and a leg but it will either take some money and a good amount of time (which can be quite a challenge when you have to work full time, take care of the kids and just live life) or it will take quite a bit more money and less time. For example it can cost $5000 or more to renovate a bathroom. Home Depot has a cost guide that can give you a better idea of what is involved. Kitchens can be even worse according to Home Depot a minor remodel can start at $20,000! All these numbers are in the DYI world since Home Depot trying to get you to buy your materials from them.
The next biggest cost that will eat up your profit when you sell your house, is the real estate commission. These usually run between 5 and 6 percent.
The way they usually work is the agent you list with gets half and the agent that brings the buyers to the deal gets half. So that means if you sell your house for $50,000 you will be paying the realtors $3000 right off the top. You can, of course, negotiate with your agent when you sign the listing contract with them, but they usually aren’t going to have a lot of room to adjust their fee. You see, they are usually working under a broker who will get about 30% of the commission the agent earns, plus the agent might have to pay other pay other fees associated with their work. Here is a little more detail on agent fees.
Other expenses to consider when you sell your house are property taxes, mortgage pay off, if you are in foreclosure or pre foreclosure you will have lender late fees and attorney fees on top of whatever balance you owe on the house. (I am going to go into a bit more detail on foreclosure in a later post) Do not forget utilities, especially if the house is vacant! The last thing you want to do is let a house sit with no ventilation. If you have lived in Louisville more than 5 minutes you know we can have ridiculously high humidity. All that humidity causes moisture which gets into the house and just sits, and because you are safety conscious, you have the house all locked up, the next thing you know you get a visit from the dreaded mold fairy and now you have another big expense. (more detail on this in a later post too)
If you are going to sell your house make sure you sit down and budget all the expenses involved in the transaction. That way you know what makes the most financial sense for you and your family.