Deal Or No Deal
When selling your home, it pays to look at the complete financial picture so you are ready to deal. Make a list of the costs of selling your house including:
- Realtor Commission
There's a 4 percent to 7 percent commission on the sale price of the house if you opt to go with an agent. Usually this rate is between 5 percent and 6 percent, but it can go as high as 10 percent on vacant land deals. It's a considerable amount of money. If you sell your house for $300,000, the standard 6 percent cut for the agent will be $18,000.
- Closing Costs
These can add up to 2 percent to 5 percent of the purchase price and include title transfer, any county transfer taxes, escrow charges and other miscellaneous fees. Read more about closing costs.
- Property Taxes
If you didn’t pay all of your property taxes before you sell a house, a prorated tax amount will be included in closing costs. Note: If you pay out of an impound tax (that's an amount tacked on to your monthly mortgage), this does not apply, since your taxes will be paid up-to-date.
- Home Warranty
Often the seller buys a yearlong home warranty for the buyer.
- Pest Inspection
Don’t worry, this doesn’t include a judgment of your nosy neighbor. Just termites. Read more about home inspections.
- Repairs on the House
Although the buyer pays for the home inspection, it's a good idea to get your own inspection before putting your house on the market. This way you're aware of any hidden problems before selling.
After you detail the costs of selling, you might be wondering how anyone makes any money. Well, one of the biggest perks of any house sale is the lack of capital gains tax (assuming you have lived in the residence for two of the last five years). The government allows for a write-off of up to $250,000 gained in the sale of your home for a single owner, and $500,000 for married couples. This applies for most state taxes as well; check with your accountant to be sure.