The Hidden Cost to Sell a House

What makes up these hidden costs to sell a home?

Here are just some of the expenses that can add up along the way.

1. Home inspections. Many buyers will request a home inspection prior to purchasing a home. It protects them from making a bad financial decision if something is wrong with the house. The home inspection process can take between two to four hours — and includes checking the home’s heating system, central air conditioning, interior plumbing, electrical system, roof, attic, walls, ceilings, floors, windows, doors, and foundation, to name a few. Buyers are typically responsible for the upfront cost of a home inspection. However, they often use any issues that arise as a way to negotiate the sale price down. So, while buyers may foot the upfront bill, it’s the sellers who might end up losing money in the end.
2. Home repairs. Prior to selling your house, you may opt to make repairs or upgrades in hopes of increasing your property value. However, you don’t always recoup the money you spend. Let’s say you replace the roof, which has passed its life expectancy. You might pay $28,256 for asphalt shingle replacement, based on national averages from the Remodeling 2021 Cost vs. Value Report (www.costvsvalue.com).¹ You might recoup $17,147 on that investment during the home sale, which is 60.7 percent ROI. That means you spent $11,109 of your own money that you won’t likely make back. If your house has other issues, such as plumbing, you might be footing the bill entirely. On the high-end, plumbers can cost up to $3,000 for bigger jobs, according to Angi. Very little of that money would be recouped at the home sale, as functional plumbing is expected in a house, unless it’s being sold “as is.”
3. Professional cleaning. You want your house in tip-top shape for your listing photos, as well as for your recurring open houses and showings. Each time your house is cleaned, you might expect to pay an average of $221, reported Fixr. Most likely, your house isn’t vacant. If you have tenants or you are living in the home yourself, you have to pay that fee each time you have another open house. That can really rack up. Not to mention, most real estate agents recommend that the people living in the house leave during open houses or showings. They want prospective buyers to imagine that this is their future home — and that’s difficult to do with the current owners around. This creates an opportunity cost of time. Each time you have a showing scheduled, you have to leave, which is especially difficult to do if you work from home and time is literally money.
4. Generally, professional stagers charge $300 to $600 for an initial consultation, followed by up to $600 per month for each staged room, according to Realtor.com. If you are staging your house, you want your interior to look put together for every showing or open house. That’s why professional home stagers often require a three-month minimum contract — even if you sell the property in the first 24 hours. Let’s say that you have a three-bedroom house and also want to stage the living room, dining room and kitchen (six rooms total). You could be looking at roughly $11,400 for staging costs, including the initial consultation. Stack on top of that any décor the stager recommends you buy — and the costs continue to climb.
5. Real estate photography. Roughly seventy-nine percent of recent home buyers shopped online to find their dream home, according to Zillow. Further, nearly half shared that professional photos were extremely or very important to them when browsing online for homes. This underscores the importance of getting professional photos taken for your online listings. But like all good things, it comes at a cost. If you hire a real estate photographer on your own, you might expect to pay up to $200, according to Zillow. However, if you hire a real estate agent, the cost for listing photos is typically included as one of the services covered in their commission. They typically have a photographer ready to go.
6. Real estate commission. Speaking of real estate agents, you probably know that they work for commission. The cost of that commission is typically 5 to 6 percent of the property’s sale price. For a $500,000 house, a 6 percent commission would be $30,000. If the buyer and seller each had a real estate agent, they would typically split the total commission and pay part of their share to their brokerage (every real estate agent is overseen by a broker). Avoiding commission is one of key reasons people go the “For Sale By Owner” (FSBO) A FSBO transaction might save you on commission, but you’ll then be spending time and money hiring a real estate photographer, listing the property and coordinating showings — not to mention dealing with all the paperwork. Also, FSBOs don’t always make as much money as agent-led sales. In 2020, FSBO transactions made up 7 percent of home sales. The typical FSBO home went for roughly $260,000, whereas real estate agent sold homes went for $318,000, reported the National Association of Realtors (NAR).
7. Starting over when a purchase agreement gets terminated. Based on a three-month period in 2021, 5 percent of all purchase agreements fell through before they could reach closing, according to Rocket Mortgage, based on NAR research. Granted, it’s a relatively small percentage. However, each time a closing falls through with a buyer, you have to start over. That costs a lot of time and money, not to mention frustration.
8. Paying a mortgage lender. The timeline to sell your house can vary greatly, depending on its condition, your location and what the market looks like at the time. However, based on national averages at the moment, you might be looking at six months to prepare your house to list on the market, 25 days to find a buyer and up to 45 days to close, per Zillow. During that time, you’re still making mortgage payments. And — unless the stars perfectly align — you might even be paying for the mortgage on your next house while you’re still trying to sell your current one. This can become a huge financial burden for homeowners.
9. Closing costs. Another surprising cost to sell a house are the closing fees, which get stacked on at the very end. They’re often paid by both the buyer and the seller and can include fees like the cost of mortgage insurance, pro-rated property taxes, title insurance fees, loan processing, insurance fees, and the cost to record the deed. Most often, these amounts get deducted from the final amount you expected to be paid for your property at closing.
10. Vacant house fees. Some homeowners relocate to another city or state before their house closes. Maybe you have to move out of state for a job offer or to take care of a family member that unexpectedly fell ill. During the time your home is vacant and listed on the market, you may still have to foot the bill for ongoing electricity and maintenance, such as lawncare or snow shoveling. Additionally, if your house will be vacant for months at a time, you may need vacant and unoccupied homeowners’ insurance to protect against theft and vandalization. Many home insurance policies state that properties are not covered for these two things if they’ve been empty for more than 60 days.
11. Lawyer fees for fixing issues that arise. Some home sales are complicated. There may be an issue that arises with your title. Or you want to sell a house you inherited, but your siblings are fighting you every step of the way. You might have to unexpectedly hire a real estate attorney who can help you with anything from buying and selling a house to ownership, compliance, dispute, or title issues. Some real estate attorneys charge a set fee just to help with closings. Others might charge an hourly rate. Their fee might increase if complicated title issues arise that they have to help settle.

Selling a house doesn’t have to be costly or time consuming. Another option people consider if they need to sell a house quickly or “as is” is selling it to a home buying company, like Meridian Trust. We pay cash for houses “as is” in Florida, Georgia and Alabama. That means you can forgo all of the above costs to sell a house on the market and get paid sooner.

For more than 15 years, we’ve purchased tens of thousands of homes, townhomes, condos, apartments, and multi-family units — both vacated and rented and in all sorts of conditions.

Here are some of the ways selling to Meridian Trust saves the homeowner money during the sale process:

• No repairs or updates required. We buy the house exactly “as is.”
• No cleaning fees or requirements to dispose of unwanted belongings. That means you can leave unwanted items as big as an inoperable boat and we’ll clear it for you after the home sale is complete.
• No cost to fix title issues if we’re able to buy your property. We have an in-house title company that can help resolve any issues that arise. We also have an attorney and other experts who can help resolve any disputes that arise along the way.
• No real estate commissions, closing costs or hidden fees. We take care of all of that for you.

Call us for a free, no obligation property consultation. Then, decide if you would like to move forward once you get your cash offer.

To get started or learn more, give us a call at (954) 807-9087.

Note: This guide is for informational purposes only. Meridian Trust does not make any guarantees about the sufficiency of the content in or linked from this blog post or that it is compliant with current law. The content within this blog post is not a substitute for legal advice or legal services. You should not rely on this information for any purpose without consulting a licensed lawyer in your area.

Source:

1. © 2021 Hanley Wood, LLC. Complete data from the Remodeling 2021 Cost vs. Value Report can be downloaded free at costvsvalue.com.