Expenses Involved in Selling a Home

Here’s a rundown from BANKRATE.COM of typical costs to expect as you sell your home.

Seller’s closing costs

In a real estate transaction, many closing costs are the buyer’s responsibility. But there are closing costs for sellers as well. Some of the most common include title insurance, recording and settlement fees, and prorated property taxes and HOA fees up until closing day. You also pay other minimal fees for things like escrow and wire transfers. Additionally, if you have hired a real estate attorney, the legal fees will be due at closing.

Mortgage payoff

Your existing mortgage doesn’t magically disappear when you transfer ownership of the property: You have to pay off any remaining balance before that transfer can occur. You’ll probably have to add prorated accrued interest to the total balance, and there might be an additional fee if your mortgage carries a prepayment penalty (check your loan documents or contact your lender to find out).

Moving costs

When you sell your place, you’ll have to move all your stuff to your next place. Paying for that will set you back between $833 and $2,547, with the average moving price being $1,698, according to HomeAdvisor. However, that price tag can be a lot higher if you’re moving long-distance.

Taxes

There are quite a few tax implications that sellers need to consider prior to listing their homes. Here are three big factors that can eat into your profit potential:

Property taxes: Annual property taxes are usually paid in advance. You may need to pay the prorated share of property tax up to the closing date, with the money placed in escrow. However, if you already paid them past your closing date, you might be in for a partial rebate.
Transfer taxes: Many states levy a real estate transfer tax, which is a tax on transferring the property’s ownership. Transfer tax amounts vary based on where you live, but they’re typically a percentage of the sale price (usually less than 1 percent).
Capital gains taxes: If you stand to make a sizable profit on your home sale, you may have to pay capital gains tax to the government. It depends on the dollar amount of the profit, whether you file on your own or jointly with your spouse, how long you lived there and whether it was your primary residence. If you’ve owned the home for a very long time, give some extra thought to this piece of the puzzle. For example, if you bought the home 35 years ago for $200,000 and it’s now worth $1.5 million (not out of the question in certain parts of the country), your sale could trigger a huge tax hit.

Real estate commissions

The laws concerning real estate agents’ commissions are changing in Texas. Traditionally were the biggest fee a seller paid — historically 6 percent of the home’s sale price, divided equally between the buyer and seller agents. With new laws coming into effect, the seller does not legally have to pay the buying agent's commission. There are strong arguments to the advantages of offering commissions to buying agents, but please consult your agent for the positive and negative possibilities.