The Costs You May Not Know About When You Sell Your Home through a Real Estate Agent
There are real advantages of selling your house through a real estate agent
. That’s why the majority of houses are bought and sold on the market. The obvious cost, of course, is the commissions paid by the seller which are typically 6% of the sales price.
But, there are some hidden closing costs you may not know about when you use a realtor. As you consider the choice between selling through an agent or selling to a cash buyer, there are some other less obvious costs to consider when selling through an agent.
Seller Paid Closing Costs
Closing costs are different than agent commissions. Closing costs include the attorney fees, recording fees, state taxes, mortgage fees, appraisals, termite inspections, and document preparation that are a part of most real estate transactions. Oftentimes, market buyers expect sellers to pay the closing costs. These can be as little as $1000 for simple cash closings and can exceed $10,000 for buyers with FHA loans that include high up-front funding fees.
If you are listing a house on the market, be sure to budget for some seller paid closing costs as buyers often require the seller to pay some or all of those costs.
Inspection Repair Lists
If you ask an agent what the most difficult part of the process is, he or she will likely tell you it’s negotiating inspection lists. A typical sale includes the following people walking through the property and making lists of things that need to be fixed:
- Buyers’ Agent
- Home Inspectors
- Insurance Inspectors
- Termite Inspectors
- The buyers’ parents and any other family members who are self-proclaimed experts
- The buyers themselves
Every one of these people who walk through the house will note items they deem necessary to be fixed prior to close. These lists get complicated and expensive.
Can you choose not to do them? You certainly can, but you will risk killing the deal. Buyers won’t be able to get financing unless the appraiser, insurance, and termite lists are completed.
If the deal falls apart, as many do, you’ll have to put the house back on the market with additional days on the market. Your agent will also have to explain to future buyer agents why the previous contract fell through. This can be difficult and discourage buyer agents from showing the house.
When deals fall through and houses sit on the market, holding costs can accumulate quickly. If the house is going to be vacant, those costs increase significantly. Maintenance and insurance for vacant houses can be exceedingly expensive. It will be important to keep the house in excellent shape while it’s on the market and being shown by agents. Be sure and budget for the following while a house goes through the market cycle.
- Mortgage interest
- Utility costs
- Lawn Mowing
- Staging, if required
- Vacant house insurance, if required
- Cleaning and repair costs
There are benefits to selling your house through an agent as opposed to selling it for cash to an investor
. It’s also important to consider the costs that are often associated with selling a house on the market.
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