What Fees Are Associated With Selling Your House, From Start to Finish?

What Fees Are Associated With Selling Your House, From Start to Finish?

Like late fees, ATM fees, and shipping fees, the fees associated with selling a house can be hard to swallow. There’s a lot of people involved in the process from start to finish, and you’ll need to pay the folks who help you out along the way. Contractors, attorneys, the government, and your real estate agent who quarterbacks the transaction all take a cut.

You may offer to pay fees for the buyer to sweeten the pot and keep the deal alive, too; it all depends on how negotiations go. Plus, moving funds through a third-party escrow account won’t be free.

“Depending on the price range of the home, I tell my clients that they need to be ready to spend 9% 10% of the sale price on selling costs, including the real estate agent commission and closing costs,” says Joanne McCoy, a top-selling real estate agent in Lincoln, Nebraska.

But just how do all these fees break down, and what can you expect to take home? HomeLight has a handy Net Proceeds Calculator that can help with that. Simply input some basic information about your house and mortgage, and we’ll estimate your final payout.

Below we’ll also spell out the main types of fees you’ll see on your balance sheet so you can understand each cost:

  • Staging and prep fees (anywhere from a couple hundred to a couple of thousand dollars)
  • Real estate agent commissions (5.8% national average)
  • Inspections and repairs (varies)
  • Closing fees (1% – 3% of the sale price)
    • Title fees
    • Transfer or excise taxes
    • Escrow fees
    • Reconveyance fee
    • Recording fees
    • Prorated property taxes
  • Seller concessions (2% – 6%)
  • Overlap costs (1% – 2%)
  • Moving and relocation costs (varies)
  • Mortgage payoff (varies)
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Staging and prep fees (from a couple of hundred to a couple of thousand dollars)

When it comes to selling your home, presentation matters. Now, that doesn’t mean you should drop everything to remodel entire rooms that aren’t perfectly modern. Research shows that you’re not going to make a profit on major renovations. You’re better off doing light prep work and keeping your spend to a minimum. Here’s where you should focus your efforts and about how much you can expect to spend on each project:

Deep clean and declutter

HomeLight’s research shows that the simple acts of deep cleaning and decluttering your home can add nearly $4,000 in resale value. Clear those countertops, organize the kids’ toys, and remove items junking up your floors. Scrub the bathrooms and clean the kitchen until it sparkles. Don’t forget easy-to-miss cleaning spots like baseboards, ceiling fans, and window sills.

Pay an average $167 for professional cleaning or $485 for someone to organize your home, or enlist your family to split up the chores. Just know that if you skip these steps, you’ll leave money on the table. DIYers can follow HomeLight’s deep cleaning and decluttering checklists for more guidance.

Apply a fresh coat of paint to interior walls

Loud paint is not a fan-favorite among homebuyers. In fact, 98% of top agents say buyers prefer neutral color schemes over bold ones, according to HomeLight’s Q1 2020 Top Agent Insights Survey. Even if you already have fairly neutral colors in your home, fresh paint can make homes look and feel fresher overall.

When you head to the hardware store, gravitate toward gray tones — 79% of top agents report that buyers prefer gray over white (11%) or beige (9%) at the moment. Expect professional painters to charge $350 – $800 per room, or to do the job yourself for $100 – $300 per room. For more inspiration, you can visit HomeLight’s post on the top home staging paint colors featuring exact swatches and guidance on how to select your paint finish depending on the room.

Freshen up your flooring

A 2019 survey of 4,000 homebuyers by the National Association of Home Builders found that hardwood floors are ranked in the top 10 of 175 features essential to buyers’ purchasing decisions. If you have hardwood floors and they’re in good shape, simply shine them up with some gentle floor cleaner. You can also opt to refinish them for $2,600 to fetch a 100% return on investment, according to the National Association of the Remodeling Industry.

Replace dingy carpets for $1,621 per room. If your carpets are decent, rent a carpet cleaner for as little as $22 (for four hours) or pay a pro at a rate of $25 – $70 per room. If you’re selling a high-end home, buyers will likely come in and replace any carpet with hardwood, anyway.

Boost your curb appeal

According to 76% of top real estate agents, improving your curb appeal is often the no. 1 thing you can do to boost the marketability of your home. In addition, 94% of top agents agree that curb appeal translates to resale value. Make sure you mow the lawn, fertilize the grass, edge your walkways and flower beds, and pull up any weeds. HomeLight data shows that if you invest just $300 in basic yard care you could gain an average $1,200 in value. Install fresh mulch for another $800 boost.

Stage your home to appeal to a wide range of buyers

Nearly 83% of agents say that a staged home sells faster than an unstaged home, according to HomeLight’s research. Top agents also report that 50% of sellers who pay for home staging spend less than $1,000, and 35% shell out less than $500. Work with a top agent and they may throw in staging as a complimentary service (75% have done so in the past for clients).

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Real estate agent commission (5.8% national average)

One of the first things you should do when you decide to sell your home is to hire a top local agent. According to HomeLight’s transaction data, the national average real estate agent commission is 5.8% of the property sales price. Over the past three years, commissions have averaged 5.47%. That commission covers the listing agent and buyer’s agent fees (it’s customary for the seller to pay both).

The commission pays for your agent’s assistance in pricing your home, marketing it to the masses, and negotiating with the other parties in order to get you the best possible price and terms, among other services.

Research shows an agent’s expertise makes a big difference: In 2019, agent-assisted sellers sold their homes for a median of $280,000, compared to $200,000 for FSBO sellers. To access commission data specific to your area, consult HomeLight’s commission calculator and enter your city.

Inspections and repairs (varies)

Once you and the buyer both sign the purchase offer, the buyer will schedule their home inspection to determine whether the home has any underlying issues that could impact its value or safety. You shouldn’t have to pay any fees for the inspection itself. However, the inspection does open the door for further negotiations before closing, which can impact your bottom line.

The buyer will make requests based on the findings laid out in the inspection report. According to a study by Porch.com, inspections save buyers $14,000 on average. However, how much buyers ask for and what you need to cover to keep the deal going will depend on your home’s condition and your negotiating position. With every request, you have essentially three options: Offer to make the repair before closing, offer to cover the cost of the repair at closing with a credit, or push back and tell the buyer no.

U.S. $1 bills you can use to pay fees associated with selling a house.
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Closing costs (1% – 3%)

The act of transferring ownership of your home to someone costs money and as the seller, you’ll be on the hook to pay some of these associated fees.

  • Title fees:
    Before you can sell your home, the buyer will request a title search to make sure that you own the house free and clear of any liens, judgments, or bankruptcies. The buyer and their lender will also obtain individual title insurance policies for protection against fraud, forgeries, and other unforeseen title issues. Buyers will often pick up the tab for some or all of these fees, but norms can vary state by state and even county by county.
  • Transfer tax/excise tax/deed recording fee:
    Depending on where you live, you’ll need to pay a nondeductible transfer tax on the sale of your house to complete the transaction. The tax will be calculated based on the value of your property and may be imposed by your state, county, or city. The tax covers the costs of transferring the deed to new owners and is typically your responsibility as the seller to pay. However, several states don’t charge these fees at all. Refer to this table to see how your state handles transfer taxes.
  • Escrow fees:
    You and the buyer will likely split third-party escrow fees owed to the party responsible for handling the transfer of funds and documents during the transaction.
  • Reconveyance fees:
    When your mortgage loan is paid off during the sale, you will receive a reconveyance deed releasing you from the debt. The mortgage company has to record the deed with the county and there are fees associated with this.
  • Property taxes:
    Depending on where you’re located, and the time of year in which the transaction is closed, you might have to pay for the previous year’s taxes. The same applies to school district taxes, metro district taxes, and homeowner association dues.

You will get a chance to review all of these items in your seller’s settlement statement, a comprehensive list of fees, and credits that shows your net profits as the seller and summarizes the finances of the entire transaction.

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Seller concessions (financing and sales 2% – 6%)

Sellers sometimes “gift” money or offer other incentives to buyers at closing to sweeten the pot. This may not be necessary if your home generates a lot of interest from buyers right away and your property is clearly in high demand. However, if you’re struggling to attract an offer or in a slow market, offering concessions can help you negotiate a deal.

Seller concessions can fall into two different categories:

  • When you offer to pay a portion of the buyer’s closing costs (which can tally up to anywhere from 2% – 5% of the sale price), that’s called a financing concession. Financing concessions may cover origination fees, discount points, commitment fees, among other costs.
  • When you offer to give the buyer a non-realty item of value, that’s called a sales concession. Sales concessions may include cash, furniture, decorating allowances, or moving costs, among other offerings.

The rules around concessions depend on what kind of loan your buyer obtains, the type of residence that the loan is financing (whether it’s a primary, secondary, or investment property), and the size of the buyer’s down payment.

Fannie Mae guidelines as of Feb. 2020 cap seller concessions — also called “interested party contributions“ — for conventional loans like so:

  • 3% max if the buyer put less than 10% down (on a primary or secondary home).
  • 6% max if the buyer put down 10% – 25% (on a primary or secondary home).
  • 9% max if the buyer put down 25% or more (on a primary or secondary home – however, note that this would be a very generous concession).
  • 2% for investment properties with down payments of any amount.

Any seller costs that exceed these limits would require a corresponding reduction in the loan amount, dollar for dollar.

As of August 2019, the Department of Housing and Urban Development (HUD) caps seller concessions for FHA loans at 6%.

Homeownership and overlap costs (1% – 2%)

Depending on the timing of your home sale and how you orchestrate it with your next move, you may need to pay transition costs. If you bought a new house before selling your existing home, you’ll have to cover the principal, interest, taxes, utilities, and insurance on two properties for several months. Alternatively, you might need to rent a storage unit, put a deposit on a transitional short-term rental or pay for a partial move in order to stage the home.

Moving and relocation costs

There’s no way around it: Moving is expensive. It should be part of your budget as you look to sell your home. Move.org estimates the cost of a full-service move ranges from $550 – $12,000. But the cost of your move will vary based on how much stuff you have, the distance of your move, the time of year, and which types of moving services you opt for.

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Outstanding mortgage

The day you sell your home is also the day your outstanding mortgage balance is due. Anything you owe will be subtracted from your home sale price. Contact your lender or servicer and request your payoff amount. The payoff amount is the total you’ll have to pay to satisfy the terms of your mortgage loan, including any interest you owe until the day you plan to pay your loan in full.

Selling your home: Lots of fees, so you can get paid!

Your individual fees throughout the process of selling your home will vary based on factors like the value of your property, your state and county’s regulations, the condition of your house, and how the housing market behaves. But no matter who you are or where you live, it costs money to sell your home. If this or that fee doesn’t apply to you, great. More money in your pocket. If you’re on the hook for each and every line item, at least you won’t be caught off guard — at least that’s our goal by providing you with this comprehensive rundown.

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