Lew Sichelman
If you think it costs a bundle to buy a house – what with a down payment and all – wait till you learn what it costs to sell one.
How about more than $67,000, on average?
That’s what the typical homeowner has paid, over the last two years, to sell their place, according to new research from Clever Offers. That’s three times more than most sellers had expected to pay.
You may have to pay even more, depending on your asking price and other factors. But you could cut down on your expenses if your house is already in selling condition, if you can cut a better deal with your real estate agent, and if you stage the place to make it more appealing to buyers.
Whatever you end up spending, it’s going to cut into you bottom line. Sellers made more profit off their homes this year than ever – an average of $166,702, according to the Clever survey. Still, 17 percent of them don’t think they made enough; of those sellers, more than half blamed their disappointment on high selling costs. Many sellers either fail to budget for these costs or vastly underestimate them.
All in all, most sellers wish they could have a do-over.
“In fact, 75% of sellers would have made different choices had they known the true cost of selling a home,” writes Jaime Dunaway-Seale in the Clever report. “With a different approach, sellers think they could have made $35,915 more on their home sale than they actually did.”
Where’s the Money Go? Repairs
Whether they’re right is debatable, but there are ways to cut down on your costs – sometimes significantly. Let’s break things down.
First, there are repairs, improvements and renovations. According to the Clever survey, these make up the largest expense incurred by sellers – both prior to the sale and after a contract is signed. The average cost: more than $21,000.
At a time when buyers can be choosy, it’s incumbent on sellers to get their places in tip-top condition. That’s why 71 percent of sellers made repairs, and 63 percent said the repairs paid for themselves. In fact, sellers say repair costs were the most worthwhile of all selling expenses, giving them the highest return on investment. If anything, they wish they had spent more in this area.
But the idea here is to spend less. To that end, you can save significantly by doing the repair work yourself – but only if you’re handy, competent and have the proper tools. Buyers can easily spot shoddy DIY work.
Also, do the biggest, most important repairs first, and leave the little things till the end. If you’re replacing appliances, shop for the lowest prices, including delivery and installation fees. If you need to replace the cabinets, consider builder-grade units. They’re not high-end, but they look just fine.
Commissions and Closing Costs Add Up
Both your agent and your buyer’s must be paid – and they are, rather handsomely. Listing agents pocketed an average of $14,204 over the last two years on the average-priced house, while buyer’s agents took home $13,691. That adds up to $27,895, or 41 percent of sellers’ total costs.
Despite the costs, 37 percent said commissions are a necessary expense, and 72 percent said their agents were worth the money. Still, you can try to save on commissions, and the best way to do that is to bargain. With few homes on the market and even fewer buyers, agents are starving for business. So they may be willing to cut their fees.
You can also try to sell your place on your own, though that’s usually not advisable. You should at least pay an agent a few hundred bucks to get your house onto the local multiple listing service. You’ll have to show the house yourself, among other tasks, but it can be done.
Sellers also paid an average of $8,217 in closing fees, which cover title insurance, credit checks and other charges. They are a standard part of every real estate transaction, but sellers told pollsters these fees were the most unexpectedly expensive part of their deals.
Settlement charges vary by location, but they are negotiable. Try to get the buyer or their lender to eat some of the costs, and don’t be pushed into paying fees on the buyer’s behalf.
Concessions and Moving
Clever also found that 80 percent of sellers made some kind of concessions to buyers, whether it was a flexible closing date, including personal property in the sale or something else. On average, concessions cost sellers $5,277.
In today’s market, buyers have the upper hand, so sellers may not be able to save much here. But try not to give away the store. One in 5 sellers said they conceded too much, and half wished they had bargained harder.
To lure buyers, sellers spent an average of $2,393, mostly on professional staging, cleaning and photography. Most said these costs were worthwhile. But they are not required, and they are definitely negotiable.
And sellers also spent an average of $2,439 to move, but most failed to budget for that as part of their selling expenses.
If you hire pro movers, obtain bids from at least three before making your choice. To save even more, skip the professionals in favor of a bunch of friends; it’ll cost you a couple of six-packs and a pizza or two.
Email: Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.
