I know what you are thinking. If I am selling my home why would it cost me money? The purpose of this article is to explain the cost of selling your home. If you want to make money selling your home you need to know the associated cost, so let’s take a look.
For our example we will look at selling our $300,000 home. Make sure you know the value of your home before you list it. There are many free online home appraisal services that you can use to get an idea of your home value. After consulting with our real estate agent and using several free home appraisal services we come up with our listing price of $300,000. Great all we have to do now is sell it for our asking price and we are on easy street. Not really. The largest cost of selling your home is the commission you will pay to a real estate seller agent and buyer agent. The normal commission is 6%. So this number comes up to $18,000 dollars. Take a hard look at this number and decide if what the agent does is worth this kind of money. The truth is that a good agent is worth good money. Notice I said a good agent. Make sure you hire an agent that actually sells homes and not just lists them. The next big cost is upgrades and repairs. Normally to get your home in selling condition you will need to paint the home and replace some if not all of the flooring. You might need a new roof or kitchen appliances. If you don’t replace and repair then you will probably have to discount the asking price to compensate. I would do the repairs up front because it will be easier to sell your home with the repairs finished. So for our example let’s say you spend at least $5,000 dollars for repairs and upgrades. The next largest cost will be closing cost. Most sellers will be asked to pay some if not all of the closing cost. Our example will use $3,000 dollars. The next cost is really not a cost but a discount. The average house sells for 97% of its list price. So in our example we will lose $9,000 dollars. There are even more cost but I think we have listed enough so let’s get the grand total.
We started with a listing price of $300,000 and we need to subtract $35,000 dollars. The take home payoff is $265,000 dollars. So the bottom line is not even close to our original listing price. Don’t be tempted to raise the price of the home to compensate because you will price your home out of the market. You need to examine the cost of selling your home the traditional way before you list your home with an agent. If you decide to sell your home yourself or FSBO then make sure you can handle the entire sales process from start to finish. Selling a home is not easy so take some time to weigh your choices before jumping in the home seller arena.
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