Selling Your Home: How Much Does It Really Cost?
Although the list price of your home may seem like a large amount of money, the value of funds returned to you after selling expenses, a mortgage payoff, and closing costs is the bottom line number to be considered. This net amount returned to you should be enough to cover your move into another home. Here’s a guide to some of the expenses associated with selling your home.
Before you sell, possibly before you even list your home, you’ll most likely need to pay for staging and repair costs. Just a small investment in paint or landscaping can result in a huge impact to your home’s overall appearance and curb appeal. You may also decide to purchase a home warranty for the buyers to given them extra comfort and set yourself apart from other sellers.
Sellers traditionally shoulder the cost of real estate commissions for both the buying and selling agents. Other expenses include real estate and school taxes, which are prorated among buyer and seller, along with HOA dues. Outstanding utilities are also paid up before the home is transferred to the new buyer. For additional detail, a review of the HUD-1 closing sheet will give you an idea of what items are paid at settlement.
The seller’s mortgage balance must be paid off at settlement as well. Additionally, if you sell your house for a profit and fail to meet the IRS criteria for ownership and use, you may also owe capital gains tax. Capital gains are calculated on the profit from a home sale exceeding the excludable amount of $250,000 for single persons and $500,000 for those married filing joint returns. And don’t forget to account for the costs to obtain a new mortgage or additional financing needed to purchase your new home.
Moving costs include boxes, packing materials, and the cost of a moving company. You may also need to pay for storage or temporary housing if you’re not moving into your new home right away. It’s a good idea to get several quotes from movers for comparison purposes. Ask friends or family for recommendations.
Costs related to selling your home add up quickly, but with a proper budget and a solid offer to buy, you can still make a move into your dream home.