If you are thinking of selling your home to move to another area or to downsize, surely it has also crossed your mind the costs of selling your home. How much does it cost to sell a house? It’s important you know so you can make a plan for buying your next home.
The cost to sell a house in South Carolina or in any other states in the country depends on a number of factors including the final sales price, the real estate commission, the terms of the purchase agreement, the market condition, and more.
You cannot know exactly how much it will cost you to sell your house ahead of time, but it’s good to have a rough estimate to avoid surprises. Expect the cost of selling a house with a real estate agent about 7 to 10 percent of your home’s selling price. This cost might seem like a lot of money but if you want to get top dollar for your house, using a real estate agent to help sell your home is worth the money. Here is a great article on things to consider should you decide to sell your home on your own.
Common Costs to Sell a House
Getting Your Home Ready To Sell
Whether you decide to invest money on home improvements or spend just as little but enough to make your home in buyer-friendly condition, you will spend money and time on getting your house ready to sell.
If you want to sell your home for the highest possible price, some home improvements can certainly increase your home’s value. Knowing which home improvements make the highest return of investment is important so you know where to put your money. Here’s a guide which home improvement projects give the biggest bang for your buck.
If you do not have the budget to cover for home improvements, that’s not a problem. There are many ways to get your home ready to sell home with little or no cost at all.
Mortgage Pay Off
If you have a mortgage, your lender will collect the principal balance and any unpaid interest. If you decide not to pay your last mortgage payment for any reason, expect to pay an accrued interest, through close of escrow date. Also expect to pay other various fees including statement fee, recording fee, and reconveyance fee to close the account.
Even though your mortgage company may be paying your property taxes through an escrow account, you may still owe a prorated share of property taxes when you sell your home. The amount could be close to zero if you current or more if the due date is around the corner.
There is also a local transfer tax to be paid. Your contract will determine which party is responsible for paying this fee though it is usually the seller. In South Carolina, for example, documentary transfer tax is calculated on $1.85 per $500 of sales price. That would equal $740 for a $200,000 home.
In addition to the local taxes, you may also face capital gains taxes. In South Carolina, the uppermost capital gains tax rate was 7 percent. Of course this only applies if the profit you make from selling your home is more than $250,000 ($500,000 for married couples on joint tax returns).
The title insurance is usually paid by you. This protects the buyer in case there’s an issue with the title. The title insurance guarantees that all loans, liens, judgments, and title defects have been cleared. Any issues revealed on your home will have to be settled first before you can sell your home.
If your house is in a neighborhood with homeowners association, expect there’ll be prorated membership fees and HOA transfer fee. The purchase contract will determine who pays these fees. It could be split, paid by you, or paid by the buyer.
Just like taxes, you will continue to provide utilities while selling your home. This means staying up-to-date with your utilities bills until the day you close on the home.
In South Carolina, State law requires you to provide your buyer with a disclosure detailing your home’s quality, healthfulness, and safety. Disclosure comes in a residential property condition disclosure form. Certainly most buyers want a home that is in great shape and not needing any work when they move in. If there are any problems with the house, the buyer may request that you complete repairs, such as fixing a plumbing leak, replacing a roof, or clearing a termite infestation and repairing termite damage.
Of course, these are all negotiable. Depending on what’s stated on the purchase contract, the terms can include you paying for home warranty, a natural hazard disclosure report, termite inspection, or offering a seller credit towards closing costs.
The escrow company is a third party company that handles all the funds in a real estate transaction. In South Carolina, buyers and sellers generally pay one half of the total Escrow Fees. The fee for each party is based on the purchase price plus a base fee. Additional fees include document preparation, and other services provided during the transaction period.
Portion of Buyer’s Closing Costs
Depending on the current market, if it’s a buyer’s market you may offer to pay some of those closing costs for the buyer to attract buyers to purchase your home. In a seller’s market, you may be able to ask the buyer to pay more of the closing costs. Closing costs are negotiable just like the price of a home.
Real Estate Agent Commission
Most people selling their home in South Carolina work with a real estate agent. The listing agent’s commission usually charges 5% to 6% of your home’s purchase price. This is by far the biggest costs you’ll pay. Hiring a real estate agent to sell your home is a necessary cost. Of course you can also do it on your own if you want to save on commission, however there’s a reason why nearly 90% of sellers use a listing agent.
Selling a home is not as easy as selling a cup of coffee. If you do not use a listing agent, you could underprice or overprice your home, which could easily cost you the amount of money or more than what the real estate agent charges. Also, selling a home takes time, knowledge on real estate trends, and negotiating skills. The listing agent is involved in preparing your home for sale, helping you establish a listing price, getting buyers in your door, negotiating the transaction, tracking the paperwork and generally help you through the selling process. So a 5-6% commission might be a little hard to swallow, but real estate agents make your selling experience better and less stressful. Also, they are not getting the full 6% commission since listing agent usually split commissions with the buyer’s agents.
These are general costs of selling a house and there may be other costs you need to pay when you sell your home. Speak with your listing agent and ask for an estimate of your closing costs and profits based on your home value and your mortgage balance. Remember that careful planning and spending can result in a higher profit once you close.