It is vital to understand the costs of selling your home before listing it on the market. This can help you determine the best asking price and avoid surprises during the sale process. Selling a house includes direct costs, such as repairs and renovations, and indirect costs, such as real estate commissions. Here is a breakdown of the typical costs associated with the selling process of a house and the factors influencing them.
Your Home’s Condition
One of the most significant factors affecting the cost of house selling is its condition. If your house needs significant repairs or renovations, you can expect to spend more on the sale. If your home is in good condition, you may only need cosmetic updates, like painting or staging.
Some updates can improve your home’s value and help you sell it more quickly. But others may not be worth the investment, mainly if you sell in a market for buyers. Whichever you choose, it can cost you more in capital gains taxes when you increase your home’s sale price in Virginia. Increasing your home’s value can also increase property taxes with the home sale price.
The average expense for preparing your home for sale in Virginia is between 2 to 3% of the sales price. For example, if your home sells for $300,000, you can expect to spend between $6,000 and $9,000 on repairs and renovations.
Before committing to the work, consulting with a real estate agent is essential to understand what updates will help you sell your home and for how much. A real estate transaction is a big undertaking; you want to do everything right, from home repairs to handling your mortgage payoff.
The Real Estate Market
Another critical factor to your home sale is the current market conditions. If there are more buyers than sellers, prices will be higher, and houses will sell more quickly. If more homes are on the market than buyers, prices will be lower, and houses will take longer to sell.
The housing market changes quickly. Factors impacting it include job growth, interest rates, and the number of houses being built. Quickly rising interest rates are slowing the market down somewhat in the current market. But overall, it’s still a seller’s market in most parts of the country.
People still need housing despite the rising rates. The market is reducing how many buyers can spend and pricing some people out of the market. Homeowners saved up a ton of equity over the last few years of rising prices, so anyone with a home in good condition may consider renting it out until they can get top dollar for their home.
If you need to sell fast and don’t want to pay for the rising costs of materials because of high inflation, selling to a company that buys houses for cash might be a good option. Contact We Buy Houses RVA for a free appraisal of your home for a quick and easy cash sale.
Other factors that can affect the cost of selling a house include the location, the size of the house, and the amenities it offers.
Pre-Sale Home Inspection
Most home buyers will want a pre-sale home analysis. A professional performs the review to assess the property’s condition. As the seller, you don’t have to pay for this unless issues with the house must be fixed.
Many homeowners choose to get their pre-sale inspection to identify any potential problems that could delay or lower the home’s sale price of their homes. The typical home inspection costs between $300 and $450. However, the costs can be much higher if significant repairs are needed.
Hiring a Real Estate Agent
Most sellers use an agent when selling their homes. Realtors are experienced in pricing, marketing, and negotiating on behalf of their clients.
While using an agent is not required, most sellers find that the benefits of having an agent outweigh the costs. The typical real estate commission is 6% of the sales price, divided evenly between the buyer’s agent and the seller’s agent.
So, if you sell your home for $300,000, you can expect to pay $9,000 in commissions. This is usually the most significant expense associated with selling your house outside of any repairs that must be made. Together, you’re already out $15,000 before you’ve even listed your home.
If you’re selling in a buyer’s market, you may negotiate with your agent to reduce their commission. In a seller’s market, you may have less negotiating power.
For example, many agents will negotiate their commission in the current market because there are more houses on the market than buyers.
Home Staging and Photography
Home staging prepares your house for sale by making it look its best. This can be done by decluttering, rearranging furniture, and adding or removing personal items. Curb appeal is vital to bringing in buyers.
Home staging aims to make your house appealing to the broadest range of buyers. This increases the chances that your house will sell quickly and for the asking price.
The cost of home staging varies depending on the size of your house and how much work needs to be done. The average price of home staging is between $500 and $2,000.
Some real estate companies offer home staging services as part of their commission. Others will charge a separate fee. If you’re selling your house, you may find a home stager who charges by the hour.
Professional photography is also important when selling your house. Most buyers start their search online, and high-quality photos are essential to making an excellent first impression.
Hiring a professional photographer typically costs between $100 and $500. Some real estate agents include professional photography in their commission. Others will charge a separate fee.
If you’re selling your house yourself, you may find a photographer who charges by the hour. However, FSBO comes with several risks and challenges that you should know before deciding to go it alone. Also, you don’t skip the realtor completely. Most people looking for houses work with buyer’s agents.
It’s also important to remember that first impressions matter when selling your house. You only have one chance to make an excellent first impression, so you must do everything you can to make your home look its best.
Closing costs are the fees associated with the sale of your home. The seller pays these fees at the close of escrow.
Closing costs can include:
- Agent commissions
- Home warranty
- Homeowner’s insurance
- Termite inspection
- Transfer taxes
- Title insurance
- Attorney fees
- Escrow fee
- Notary fees
- Transfer tax
- Recording fees
- Loan payoff
- Home equity loan payoffs
- HOA transfer fees
Sellers typically pay between 2% and 5% of the sale price in closing costs. So, if you sell your home for $300,000, you can expect to pay between $6,000 and $15,000 in closing costs.
Some closing costs, such as agent commissions, are negotiable. Others, such as transfer taxes, are set by the state or local government and cannot be negotiated.
You can ask the buyer to pay some or all of the closing costs, but this will likely reduce the price they’re willing to pay for your home.
Alternatives to a Traditional Sale
Some alternatives exist if you don’t want to go through all the hassle of selling your home while losing thousands of dollars.
Use Your Home as a Rental Property
If you’re not in a hurry to sell your house, you can turn it into a rental property. This will allow you to find a buyer willing to pay your price. It’s essential to research the local rental market before setting your rental fee.
You’ll also need to factor in the cost of repairs and maintenance and the cost of property management if you decide to go this route. Other expenses include yearly property taxes, homeowners insurance, and a tax professional.
Sell Your Home to a Cash Buyer
If you need to sell your house fast, you can sell it to a cash buyer. Cash buyers are typically investors who buy houses to fix and flip or rent out. You don’t have to work with a seller’s or buyer’s agent or similar costs with a local real estate agent.
The advantage of selling to a cash buyer is that you don’t have to worry about making any repairs or improvements to your home. Investment companies will pay less than the market value of your home, but you don’t have to worry about any of the hassles or costs associated with a traditional sale. Other advantages include:
- Fast and easy sale
- No real estate agent commissions
- No repairs or renovations are needed
- No staging is required
- No showings or open houses
- A flexible closing date
Your only cost to sell a house to a cash buyer is your moving costs. The buyer’s closing costs are higher and include a prorated property tax, capital gains tax, transfer tax, homeowner’s insurance, and home improvements.
We Buy Houses RVA is a local company that buys houses in the Richmond, Virginia, area. If you’re looking for a fast and easy sale, contact us today!