When you bought your house, you spent two to five percent of your home cost on closing fees. In the grand scheme of things, $3,000-$7,000 isn’t much, but it does add up.
But now you’re ready to sell, and you’re wondering, “Do sellers pay closing costs?”
How much does it really cost to sell your house the traditional way? Is it worth it, or will your profit get eaten up by fees? Here’s what all sellers need to know.
What Fees to You Pay to Sell Your House?
There’s some bad news: selling your house can be more expensive (in terms of fees) than buying one.
When you buy, you pay closing costs, agent’s fees, and legal costs. When you sell, you usually need to spend money on:
- Staging costs
- Agent commissions
- Closing costs
The first few costs vary dramatically by property. Motivated sellers who want to get the best price possible will spend more to stage their house, tidy up their yard, and make minor or even major repairs.
The final two costs, commissions and closing, tend to be uniform.
How Much Does a Real Estate Agent Charge to Sell Your House?
There’s even more bad news. Selling your house means splitting the sale with your real estate agent, assuming you hire one.
Agents do work for their money. They do things like:
- List your property
- Get photos for your listing
- Schedule paperwork
- Arrange and host tours
- Negotiate with the buyer
However, you do pay them 5 to 6 percent of the sale price in commission for the pleasure.
They then split the commission with the buyer’s agent.
But it’s a huge amount of money. If you sell your house for $250,000, then you’ll pay $12,500 in commission on the sale.
Even if you don’t use a selling agent, you still need to pay commission to the buyer’s agent if they have one. According to the National Association of Realtors, 87 percent of buyers use an agent, so it’s unlikely that you’ll get out of that one – unless you sell for cash.
Do Sellers Pay Closing Costs?
You might remember seeing the bill for the closing costs when you bought the house.
You also have to pay closing costs when you sell the house.
A seller pays less on average to close (1 to 3 percent) because there are fewer fees involved. Sellers typically pay:
- Closing fee
- Property taxes
- Attorney fees
- Transfer tax
- Recording fees
Your bank may also charge you a fee for paying off your mortgage early, but the fee varies by lender and mortgage type. You may pay 2 to 4 percent of your original loan amount as a penalty for paying the loan off before the end of your term.
There’s also a fee known as “seller concessions.” You may have even benefited from it when you bought your property.
Seller concessions involve paying some of the costs to encourage the buyer to go further along in the process. For example, if they don’t have cash for closing costs, a seller might offer to pay for a processing fee or inspection cost. You might also use them to entice a buyer if you live in a buyer’s market or to encourage them to bid in a seller’s market.
Buyers can ask for up to 9% in concession fees if they have a conventional loan that follows Fannie Mae guidelines. Buyers with FHA or VA loans can only ask for 6% or 4% respectively.
Keep in mind that seller concessions aren’t mandatory, but agents may instruct their buyers to inspect them.
What Other Costs Do Sellers Pay?
You thought there couldn’t be any more costs? Think again.
After finalizing your sale, you’ll also need to pay the moving costs and any other expenses related to moving into your new home.
If you don’t already have a place, then you might need to secure a rental or temporary accommodation as well as storage for items that don’t fit in the new place.
Can You Save Money When Selling Your Home?
Some of the fees involved in selling your property are mandatory. If there’s a tax, then you have to pay for it. Your bank will also require you to pay the early pay-off fee if you have a mortgage.
However, there are still thousands of dollars in savings awaiting you if you’re willing to put in a little extra work.
If you want to save major cash when selling, you have two good options:
- FSBO (for sale by owner)
- Cash sale
Both of these skip the real estate agent commissions, which means you can save upwards of three percent in fees. Though, remember that a FSBO buyer will still typically use an agent, so you will still pay those agent’s fees.
They also skip listing fees, the need for professional photos, and some of the more nitpicky things agents look for to maximize their own commission.
Perhaps the cheapest way to sell a house is to sell it for cash.
When you sell for cash, you don’t need to pay for repairs. There are no fees. Cash buyers don’t care whether you have professional photos. They also close quickly, which means you can move on from your current property in days rather than months.
Would You Prefer to Skip Home Selling Expenses?
Many first-time sellers wonder, “Do sellers pay closing costs?” The answer is, unfortunately, yes. What is more, all the commission comes out of your profits and some buyers demand that you pay their closing costs as a negotiating tool.
While there are some expenses you can’t avoid, like paying tax, you can steer clear of demanding agents and their buyers by selling for cash.
Do you want to sell your house for cash in Florida? We can help. Get in touch to learn how much you can save by skipping the real estate market.