By Jackie Lam

Selling a house can be an undertaking, and one of the major factors to consider is how much it costs to sell a home, both in time and money. Here, we go over the typical costs of selling a home and how you might be able to save some money in the process:

Agent commission

Ninety percent of homebuyers bought their homes through a real estate agent in 2021, according to the National Association of Realtors. If you’re planning on selling yours with an agent, you’ll most likely pay 5 percent to 6 percent of the sale price of the home in commission. This fee is typically split between your agent and the buyer’s agent. The commission can be one of the biggest costs of selling a home, so know how much the agent charges and get that in writing before moving forward with a listing contract.

Home improvements

Before putting your home on the market, you might want to invest in home improvements to make it more attractive to buyers and up its value. The cost for different types of home improvements varies and depends on the scope and size of the project and the materials you use. The average cost of upgrading a kitchen, for example, is anywhere from roughly $13,400 to $38,000, according to HomeAdvisor, while the average cost to install fiber cement siding can range between roughly $6,500 to $21,800, HomeAdvisor reports. There are also DIY and smaller upgrades that cost far less.

Prepping

Let’s not forget some costs go into prepping your home for sale, such as cleaning. If you plan on hiring a professional service to clean, the cost hinges on how much work needs to be done, your location, and how large your home is. For instance, you might need to have carpeting cleaned, or an organizer come in to help purge some of your belongings so your home is show-ready. Professional organizers can charge anywhere from $55 to $100 an hour, HomeAdvisor reports, or might charge a flat rate to, say, clean out your kitchen, bedroom closets, or garage. 

Staging

You can save money by staging only the rooms buyers care most about when it comes to staging. According to NAR research, these are the living room, master bedroom, and kitchen. You could also save by enlisting your agent to help. The median cost of staging is $1,500, NAR reports, but that comes down to $300 when the listing agent does the job.

Pre-listing inspection

To understand the condition of your home before you sell, you might be considering hiring a home inspector to do a pre-listing or presale inspection. This inspection examines the structure and major systems of your home. While the buyer typically completes (and pays for) an inspection once a purchase agreement is pending, a pre-listing inspection can give you an idea of what repairs need to be done before it gets to that point. You can expect to spend anywhere from $350 to $500 for a pre-listing inspection. 

Home warranty

If you want to help make your home more attractive to buyers, you might want to consider including a home warranty. A home warranty is different from homeowners insurance in that it doesn’t cover the structure of your home; rather, it covers the cost to repair or replace major systems — think HVAC, plumbing, and electrical. It can also cover appliances, depending on the agreement. Home warranties generally come with monthly or annual fees. If the latter, it’s typically anywhere from $220 to $1,800 a year, according to HomeAdvisor. Some home warranty companies offer a free warranty while your home is on the market, but that’s only if you’ve already purchased one prior.

Mortgage payoff

If you still have a mortgage on your home, the balance will need to be repaid to your lender using proceeds from the sale. Note that paying your mortgage off early could mean getting hit with a prepayment penalty, but not all loans have them. If yours does, you might be charged either a flat fee, a certain number of months in interest payments or a small percentage of the remaining balance.

Closing costs and concessions

Closing costs are generally 2 percent to 5 percent of the price of the home. While buyers pay for most of these, that doesn’t mean you’re completely off the hook. Depending on how negotiations go between your agent and the buyer’s, you might be paying part of the buyer’s closing costs. What you pay could go toward costs like the buyer’s property taxes or title insurance or appraisal fee. You’ll also need to pay a one-time transfer tax, if your state imposes one.

Capital gains tax

You could be subject to the capital gains tax when you sell an asset for more than you paid for it.However, when you sell your primary residence, you can exclude up to $250,000 in gains if you file as an individual, or up to $500,000 if you file jointly with a spouse. To qualify for this exclusion, you’ll need to pass both a means and use test. In short: You’ll need to have used and owned your home for at least two years out of the five prior to the sale of your home. The good news is that you can qualify for the “use” part and “ownership” part during different two-year time blocks during that those five years. One caveat, though: If you sold another home and tapped the exclusion in the two years before you sold this current one, you’re out of luck.

HOA fees

If you’re selling a condo or a home in an association, you typically need to pay an HOA transfer fee, which covers expenses that are part of the transfer of the property, such as amending, preparing and distributing documents. The HOA transfer fee generally costs no more than $500.

Moving

If you’re selling a home you lived in, you’ll need to pay for moving costs, such as hiring movers, packaging and shipping materials or renting a moving van or truck. If you’re in transition between homes, you might also need to pay for a temporary rental, Airbnb or hotel while you move, and a storage unit to safely stow any belongings. All of these costs vary depending on your needs and situation, such as how much stuff you need to transport from point A to point B, the distance between the two locales and how long you’ll need to rent a place or store things, if needed.

Time

As time is one of the most valuable resources you have — and it’s a finite resource at that — selling a home could be a large investment. If the closing on your home is far out, it could potentially cost you more in holding costs, like homeowners insurance, security system fees, utilities, and garden or pool maintenance.

How to save on the cost of selling your home

As all the costs involved with the selling of your home could cut into the profit you make on the sale, here are some ways you might be able to save:

  • Negotiate the commission Ask your real estate agent if there’s any wiggle room on the commission rate. This strategy can work especially if you can offer more properties for the agent to sell or make several referrals on the agent’s behalf.
  • Look for free notarization You’ll typically have to pony up a fee when you need to notarize any documents through the title company or escrow company — sometimes a couple hundred dollars. Try to find a provider that doesn’t charge for this part of the service.
  • Handle your own prepping If you’re able to declutter and deep-clean your home on your own, you won’t have to hire professionals. Likewise, if you have simple, neutral, or timeless furnishings, you might be able to handle the staging yourself with these existing pieces.
  • Consider the trade-offs between time and money On the flip side, while you might be shelling out more bucks, paying for professional services could help you save time and headaches. Do the math and decide if the value of a cleaning crew is worth the expense given the time commitment. Sometimes the time savings outweigh the cost. This is often the case for sellers who work with an iBuyer, who need to sell their home within a specific time frame. 

This article is also posted on Bankrate here.