What To Know About The Costs Associated With Selling A House
Selling a house is typically one of the largest transactions of anyone's life. As such, there are considerable risks involved, as well as a lot of stress and significant costs built into the process. According to Zillow, costs for the seller range from 8% to 10% of the home's total sale value, and include around 6% in agent fees and 2% to 4% in other costs that the seller typically is responsible for. The average U.S. house price is about $217,000, and if your house is worth that much, you can expect to pay $17,000 to $20,000 in order to sell it.
According to the National Association of Realtors, around 90% of house sellers in the U.S. are assisted by an agent. This means that 10% of sellers avoid paying agency fees, which are the majority of the expense of selling a house. Though avoiding those costs might seem attractive, doing so can actually lose you money — the lack of agent expertise and effort could lead to selling your property at a lower price, according to Realtor.com.
So, what exactly does that 6% commission purchase you, and what are the other costs associated with selling a house? Plus, what can you do to minimize those costs? Continue reading to find out more.
What do your fees cover?
A real estate agent's fee of 6% of the total sale is typical, and in most cases, this is split 50/50 between the seller's agent and the buyer's agent, according to Raleigh Real Estate. However, agents will also often have to split their 50% again with their broker, so the number your agent receives could be closer to 1.5%. This is the money they live on, pay their overheads and travel expenses, and market your home with.
However, what you're really paying for with an agent is expertise. According to Money, buyers love scrolling on property sites so much nowadays that they often find their perfect home online by themselves. So a good agent ensures that your house gets seen by the most buyers, in the best state possible, at the best price.
Per Uphomes, it is here that agents' expertise is most important — advising on cheap touches that will impact the price, arranging expert photography, and being immersed in the local market. These all augment the final price. According to Bankrate, the average price of a house sold by an agent is $318,000, which is around $58,000 more than the average price of a house sold without an agent.
While the buyer's side handles most other closing costs, sellers also need to cover some expenses to close out their ownership of the property, such as repairs requested by the buyer, outstanding taxes and bank or mortgage fees, moving costs, and utilities.
Can you avoid these costs?
Some costs associated with selling a house are unavoidable. According to Real Estate Witch, certain states require sellers to hire a lawyer, though some don't. Taxes will almost always have to be paid, and you will have to settle your bill with the utility companies. Unless your house is in perfect condition (or a total wreck), the buyer will probably ask you to pay for some repairs in order to ease the sale — if you want the sale, you won't be able to avoid that cost either.
The real estate agent's commission is the major area for potential savings. The rates are set by convention, not law, and so are always open to negotiation. Ask your agent, and shop around for the best deal. According to The New York Times, commission rates in the U.S. are significantly higher than in Europe or Asia. This means that more companies and agencies are offering solutions to attract sellers looking for a lower cost of selling a house.
These might be simply reduced-fee brokerages, but some brokerages are beginning to offer limited services to sellers without agents, such as contract proofreading or market analysis, per Consumer Reports. Finding a brokerage like this in your area could allow you to take a more cost-effective and tailored approach to selling your home whilst still providing checks and balances to make sure you don't make any costly mistakes.