The Cost Of Selling A Home

Not So Fast...

Depending upon the market, selling your home can be a ticket to something far better than you have, or, it can be a mistake. It is important for the would-be seller to sit down with pen in hand and do the math to see if selling is really the best choice. It is important to know how much equity is in the home as compared to how much it will take to clear the mortgage. Then there are other costs, not-so-hidden, that can really eat into the monies you thought you'd have free and clear.

Can You Pay The Mortgage Out Without Penalty?

Before we even talk about commissions and legal fees, let's look at the loan payoff factor. How much is owed on your current home mortgage? The total owing is actually more than the amount that appears on the statement you receive from the bank or loan company. The interest that is paid is actually for the month prior to the current month, which means that you pay off March's interest in April. So, the next effect is that you owe the current balance plus one month of interest. Also, you'll want to know what penalties, if any, are demanded for paying out your mortgage early and if there are any liens or home equity loans which will need to be cleared at the closing of the sale.

Negotiate Real Estate Commissions

The real estate agent is often the biggest expense in selling a house. Commissions can range from four percent to seven percent of the selling price, unless you plan to use a limited service brokerage that will help you sell your home by yourself. However, the do-it-yourself concept is not everyone's cup of tea. It's good business to check out a number of real estate agencies and negotiate where you can for a good deal. With a slower market, some agencies are willing to drop their percentage of commission to gain the business.

Closing costs have a few big ticket items included, such as title insurance, which can be around $1,000 to $1,500, with the cost rising with the price of the home. Pro-rated property taxes, transfer taxes, and legal fees all add up as well.

Home Inspection and Improvements

Home inspection costs are necessary to be sure your infrastructure is sound before putting the house on the market. It's wise to list and price out the repairs you will want to make to the house before market (be sure to get estimates and keep a list of expenses for tax time). Cosmetic improvements may be necessary as well. Fresh paint, new carpeting, or landscaping are additional costs of selling which may become hidden if you don't record them.

What About Relocating?

Finally, there's the cost of relocating that is also part and parcel of selling a house. You'll have to move somewhere and that can entail moving and storage fees, new appliances, transfer fees, utilities hookups and any cosmetic work you want to perform on your new address.

At the end of the day, after totaling all of these costs, you may find that this may not be the best time to sell your house. Or, conversely, it may be the best time ever. Know what it will cost you before you decide to list.