Breakdown of Costs Associated With Selling Your Home

For most people their home is their largest asset so when the time comes to sell you want to know the market value but it doesn’t stop there. You will also want to know what the costs are involved so you can ultimately estimate your potential profit. Here is a closer look at what you should expect. 

One of the first things to do is to connect with a professional real estate agent such as myself to get a feel for what the fair market value is. This is the number you should expect to get near for a sale price, then you can deduct all of your expenses from it. Your main expenses will include:

-Agent commission. This is typically 5-6% of the sale price which covers the professional services of marketing and facilitating the sale for both the buyer and seller side of the transaction.

-State Transfer Tax. This can be different for each area so you will need to check the local rate. A common amount as a guide is roughly 2%.

-Closing costs. Attorney fees, deed preparation, wiring fees and the like. Estimate around $1,000. 

-Miscellaneous. This also can vary depending on the home but you may want to budget around $2,500 to cover items like small repairs and miscellaneous staging. 

The list of the above items are very typical and pretty standard closing costs. However, there can be some cases where there are more costs than just these. These can include:

-Buyer concessions. There may be a contingency inserted into an agreement that the buyer will proceed with the purchase contingent upon something. This could be like if the seller agrees to make a repair, replace an item or the like. Also common for first time buyers is if sellers will pay money towards the buyer’s closing costs. These costs will also need to be added in.

-Capital Gains Tax. Perhaps more common in recent years with rising home values, capital gains tax is something you might need to pay. On the sale of a primary residence a single homeowner can profit up to $250,000 on a home sale without a tax penalty. Beyond that gains are usually taxed at a rate of 20%.

Finally, if you want to be even more granular, especially if your next move is to a location far away, you may want to add up your moving expenses for relocating.