Many times when someone is attempting to sell their first house mistakenly assume that they will receive the full amount of their selling price less what is owed on the mortgage. If you are selling the traditional method through an agent, the cost of selling your property may surprise you.
Costs Of Selling Your Home Through An Agent
A lot of times when first time home sellers go to the closing table, they are surprised at how much it costs them to sell their property. When you sell your house the regular way through an agent, the costs can add up quickly, and then depending on your market and condition of your home, there maybe some additional costs as well.
First, what the largest amount of money spent on closing is what goes to the agents. Kate Ashford has this to say about it on Forbes:
The biggest chunk of sales costs is made up of agent commissions and transfer or sales taxes ($13,357). “Your biggest ticket items are going to be that estimated closing costs column,” Olsen says. In terms of agent’s fees, typical costs include 3% of the sale price to the seller’s agent and another 3% to the buyer’s agent. As your home increases in value, so do your agent’s fees.
6 percent is a lot of money. On a 200k home that’s $12,000 alone gone to just realtor commissions. In our opinion, it is well earned though. You have to stop and think what your listing agent does for you (at least the good ones). There is all of the marketing that they do, showings of the property when you aren’t there, set up and handle open houses and negotiations with buyers agents. If they don’t sell your house, those are their expenses that are not recouped.
It doesn’t stop there, there is also closing costs that the seller is expected to pay as well:
Some of these costs may include HOA (or homeowners association) fees, property taxes, attorney fees, transfer taxes and title insurance. You also may be asked to pay an escrow fee, a brokerage fee and a courier fee. Altogether, closing costs can range from 2 percent to 4 percent of the selling price.
Here in Georgia we typically see these additional closing costs at an average of 3%. Depending on where you live and the condition of your market will cause that number to vary.
So now we are at 9% of your selling price, but hold on, we are not done yet. There are still more things that you may have to pay for, some of them maybe even before closing:
Home repairs: Your buyer will probably order a home inspection before closing. If the report reveals problems, you may be asked to pay for repairs.
Moving costs: Whether you buy boxes, pack and move them yourself or hire a company, you’ll want to budget money for the actual move.
The home repairs that need to be made that are noted from a home inspection are often times something the seller never saw coming. If you are considering selling your home with an agent it may be in your best interest to have your own home inspection preformed so you don’t have any last minute surprises.
Unfortunately, we still aren’t done with what it could cost you when selling your home. Watch this video that explains other possible additional costs, again depending on the area in which you live:
As you can see, it can add up to be quite costly when selling your home.
There Is An Alternative When Selling Your Home
There are really 2 alternatives to selling your home with an agent. The first is to sell your home yourself. However it is likely that if you properly market your property yourself the buyer will have an agent, and you will have to negotiate their commission. In this case you will also probably still have to pay some of the additional closing costs. The amount that you are required to pay will depend on your negotiation skills, or the amount of money you are willing to pay vs. not making a sale.
Your 2nd option is to sell to an investor, or a “house buying company”. This option isn’t for everyone though. If your house is newer and doesn’t need any repairs and you have all the time in the world to wait on a buyer, then your better off either using an agent or selling yourself. If your house is in need of repairs, or you need to sell quickly, this might be a viable option for you.
The reason an investor or a company that buys houses is an option is because they usually pay closing costs. That means no realtor commissions (as long as you haven’t hired one already) and no closing fees. Learn more about how home buying companies work here “How We Buy Houses For Cash Works“.
Our company, Mandich Property Group is a house buying company in the Metro Atlanta area. In most instances we pay all of the closing costs. That means at closing you will get the full amount that we agree upon, less your mortgage. It’s a great alternative for people that are in a hurry to sell, or for whatever reason can’t or don’t want to use an agent. You can learn more by visiting our site, or call us at 770-756-8680.