When selling your home, first time home sellers often only think about the selling price less the real estate agents’ commissions of 5-7%. In today’s article, we’ll review some hidden costs that you need to be aware of and take into account.
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.
Depending upon the condition of your home and how hot the housing market in your area is, you may 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.
You’ll will need to pay a lawyer 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 “file maintenance” and the costs quickly add up. So talk with at least 4 law firms and ask approximately what they charge to handle a home sale. A few phone calls can save you hundreds of dollars.
Everything Is Negotiable
Home inspection fee? Termite tenting? Appraisals? 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.