The Costs of Selling a House

If you’ve decided to sell your house, you may have been checking out real estate prices. However, bear in mind that that whatever a buyer brings is NOT what you can put in you pocket when your home sells.

So, what are some of the costs of selling a house? You can contact your real estate agent, who would be able to provide your with an estimate net sheet but here’s an overview of common closing costs.

1. Necessary Repairs.

Cost: Varies (from a few hundreds to a few thousands). Often, we turn a blind eye on minor cracks and scratches in our home. When you need to sell, you want to make sure your house looks top notch. The cost will depend on whether you’ll do stuff yourself or hire help.

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A couple of hundred dollars spent on paint, landscape tiding and so on will go long way for you.

Also rememer, a buyer will order a home inspection. To avoid surprises later it’s best to do any postponed repairs before you place your home on the market.

2. Real Estate Commission.

Cost: 5-7% of the sale price. Remember, real estate commission is not set in stone. Traditionally full service broker’s commission has been around 6% but it’s negotiable. This would include all expenses associated with marketing your home and bringing a buyer in.

Alternatively, you may want to try selling FSBO (for sale by owner). In that case you will have to pay for any advertising, signs, flyers, MLS listing etc. Still, be prepared to offer around 3% to a buyers agent, otherwise it’s going to be much more difficult to sell.

2. State Excise Tax (in WA).

Cost: up to 1.78%. When you transfer real estate ownership in the state of WA, you need to pay a real estate excise tax. It works similar to sales tax in your everyday shopping, except that in real estate it’s the SELLER (not the buyer) who pays the tax.

The real estate tax consists of local and state portions. Currently the state rate is 1.28%. In most areas of Snohomish county the local rate is 0.5%, which brings the total rate up to 1.78%. Current rates can be found on Washington Department of Revenue website. (Please, let me know if the link no longer works)

3. Closing costs.

Cost: 1-4%. There are various closing costs that a seller has to pay:

Escrow fees . A third party escrow company will do the closing process after you negotiate a contract with a buyer.

Title fees . You will have to buy an owner’s title insurance.

Various document fees . There may be other recording/notary/courier etc fees.

Buyer’s closing fees . Often buyers ask (while you negotiate a deal) to pay a portion of buyer’s closing costs (such as appraisal, loan origination fees, lenders title insurance etc).

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4. Home Loans Pay Off

Cost: Your loan balances. Some people forget that not only their first loan but their second or their home equity line of credit need to be paid off as well. If you sell your house, you need to pay off all loans secured by your home.

Some home loans have a prepayment penalty. Basically, it may say that if you decide to payoff your loan in full within 5 years, you’ll have to pay a prepayment penalty (e.g. equal to your 6 month loan payments). To avoid surprises later, check your loan paperwork.

5. Federal Income Taxes

Cost: Varies. Typically, if you sell your owner occupied home, you won’t have to pay federal income taxes (up to $500,000 of capital gain on your primary residence is excluded from taxation). The situation may be quite different if it’s your rental property or you used a part of your home for business purposes.

In either case, whenever you make such a big decision as to sell a house, you should always consult your CPA, and if needed, a real estate/tax attorney.

6. Moving/Relocation Costs

Cost: From a few hundreds to a few thousands. These are not officially costs of selling a home. However, it’s a practical expense that you’ll have to cover out of your pocket. You may opt to rent a truck, call your buddies, and haul the furniture and belongings yourself. That will cost you a couple of hundred dollars and a few days off work. The more expensive option would be to hire professional movers.

If you’re ready to sell your house or have additional questions about the process, contact your Washington Realtor for a free consultation.

Photo: (c) Digitalpress / PhotoXpress.com

Recent Home for Sale Listings in Everett, WA:

(all data current as of 1/10/2018)

Listing information deemed reliable but not guaranteed. Read full disclaimer.

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