This is a guest post from Dominique Brown. If you are interested in submitting a guest post, please see my guest post policy. Dominique Brown is a financial planner, landord, personal finance blogger and video blogger. He is the owner of YourFinancesSimplified where he talks about everything from being a new father to his worst financial mistakes. He is also the owner of InsiderRealEstateTips where he talks about real estate exclusively. You can find him either on Twitter, Facebook, Youtube or Instagram.
Although it may not seem that way while you are in the process of selling your home, the bleeding will stop at some point. Few of us consider the fees involved in selling a home until we are well into the game and there is no turning back. The experience is a bit like death from a thousand cuts. No one fee (apart from the realtor’s commission) is particularly significant. Rather they can be overwhelming in their totality.
We will expose you to many of these fees for selling a house here, some predictable, others less so. I hope knowing what to expect will lessen the pain.
The Big One
This is the real estate broker’s commission. Most of us regard the fee as excessive, but what most of us fail to consider is the broker is usually sharing that fee/commission with another broker on a 50/50 basis. Now that might not take the sting out of the 5 to 6% fee you are paying, but at least you understand that your broker isn’t typically getting the whole nut. Your broker shares that with the realtor who presents the buyer. This, incidentally, is my primary reason for being negative on the whole concept of selling your own home. You actually save only half of the commission costs if a realtor brings you your buyer.
Fees/Costs
Here is a list of the most common fees for selling a house that you may incur:
Appraisal fee – Appraisals are not usually required but recommended. You want to have something as a baseline when you discuss a selling price with your broker.
Inspection fee – Some states require a termite inspection. Other inspections may be required depending on your jurisdiction.
Survey fee – This establishes the boundaries of your property and insures that any infringements can be determined and dealt with before closing.
Excise taxes – These vary by state, and it’s like a sales tax on the sale of your home. Some states have an excise tax and some do not. Your realtor can tell you where you stand.
Property taxes – You may be required to cover the property taxes while the home is in escrow.
Recording fees – These vary from state to state, from county to county, and from city to city, but they are not significant expenses.
Document fees – These also vary, but are rarely of any significant amount.
Lien release fees – This is the fee necessary to clear your mortgage holder’s lien from the title to your property so the buyer’s mortgage company has first lien. The cost is usually just a few dollars, but you may incur some express mail charges on top of that.
Title Insurance – This is usually at the buyer’s expense, but you may end up learning you have a lien on your home. You have two options. Fight it or pay it off.
Pre-payment penalty (maybe) – Some mortgages have pre-payment penalty clauses that can run into a substantial chunk of change. Color yourself warned.
These fees and costs are largely unavoidable and most are non-negotiable. The next and larger fees we discuss below, technically speaking, are optional, but as a practical matter, they are necessary expenses that you should regard as inevitable fees for selling a house.
The Facelift
Unless you are living in Graceland, you will need to spend some money get your home in tip-top condition. In the real estate trade, they call it “curb appeal.” Naturally, these costs will vary based on the condition of the home. Regardless, next to the real estate broker’s commission, this will be your largest single expense. This external treatment is only the beginning because there are undoubtedly issues within your home that will need addressed as well. The running toilet, the leaking faucet, the faulty disposal; all these must be repaired. All those things you have deferred for another day… well, that day is here.
Moving Expenses
Yes, if your home sells, you will have to move and that can be expensive. How expensive depends on a variety of factors that you know better than I. The point is, these also are expenses that must be regarded as fees for selling a house.
Have you sold a home recently? What have I overlooked? Help our readers out by leaving a comment. We appreciate your feedback!
