September 24th, 2015
If it’s your first time home selling a home, you may think your profit is the selling price less the real estate agents’ commissions of 5-7%. However, there are some hidden fees that you should be aware of. If you’re not going to profit as much as you thought, you may want to consider alternatives such as renting out the house.
You will probably need to make some major or minor home improvements prior to putting it on the market. Your real estate agent can help make recommendations that will help show the house in its best light. These updates can include painting, new carpeting, new flooring, landscape work and minor remodeling. Repairs can cost hundreds or thousands of dollars, depending on the size and age of the house. Major repairs like plumbing, electrical or HVAC systems can easily cost thousands of dollars in fixing. Generally speaking, these improvements do pay for themselves when coming up with the final perceived value of the home. Doing a major kitchen remodel probably wouldn’t, but a simple facelift with some new paint or cabinet hardware may. Again, talk to your agent. Additionally, you will want to consider how hot your market it, and how often people remodel in your neighborhood as soon as they move it.
You’ll will need to pay a law firm to help prepare the purchase and sale, as well as the closing documents.
Legal fees can vary based on location and experience, but on average you should budget for $600-900 for legal fees plus an additional $200-400 for disbursements, which include registering the mortgage, completing a tax certificate, and doing a title search on the property.
Throw in the typical lawyer administrative fees for postage, faxing, photocopying and ìfile maintenanceî and the costs quickly add up. So talk with at least four law firms and ask approximately what they charge to handle a home sale. Get referrals from friends who have bought or sold a home recently. A few phone calls can save you hundreds of dollars.
From the appraisal cost to the home inspection fee and everything in between, it’s negotiable. The buyer can ask you to pay for all of these closing costs during negotiations and can add up to another 3-5% of your home sale price. If you’re in a strong buyers or strong sellers market, it will impact what you choose to pay.
Read your loan paperwork carefully and be sure you don’t have any hidden costs such as a pre-payment penalty. Also, remember that you are still responsible for paying the mortgage, taxes, insurance, maintenance and utilities while your home is on the market.