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  • Writer's pictureBraxton Bennett

What Does it Cost to Sell Your Home?

It is a Seller's Market. So if you have entertained the idea of selling your home, just know it does cost money. It doesn't typically come from the cash in your bank account but it comes from the equity you have sitting in your house. This article is to help you know the costs and know what exactly they are for so you can make the most informed decision.

First let's explain what equity is. It is a common term that is thrown around but not everyone knows exactly what that is or how to calculate it. Let me teach you. Equity is the money that you have stored in your property. Here is the formula to calculate equity.

Market Value of Home - Remaining Mortgage = Equity

So if you could sell your home for $300,000 and you owe $200,000 then you have $100,000 in equity. Out of that $100,000 is where your selling expenses will come from.

Here are a list of all your selling expenses and then I will break them down and explain them and their pricing.

- Title Insurance

- Title Fees

- Property Taxes

- Real Estate Agent Commission

- Repairs

- Any negotiated buyer expenses

Title Insurance

When selling a home you will, in almost all cases, go through a title company to convey the property to your buyer. This title company will do a title search of your home to make sure it is a free and marketable title and that you are the owner or have the rights to sell it. That title search you will provide to your buyer to help them in knowing exactly what type or property they are buying and you purchase title insurance for them. This you do to protect your self. Title insurance insures the title of the property has no other claims to ownership. This will protect you from the buyer coming back if a claim is to crop up. You then will refer them to your title company who will handle that complaint.

How much is it? That really depends on the title company and the sales price of your home. They have rates that go higher for the higher value of the home. I can help you get a rough estimate but to get accurate numbers talk the title company you want to use to get that information.

Title Fees

As well as providing title insurance. A title company will also help you in transferring the deed of the property to your buyer and their lender and get it recorded with the county. They'll handle and disperse all the funds to the appropriate parties. For those services they charge a fee. Each title company is different in their fees but an average amount is about $350. To be safe I would plan a little higher.

Property Taxes

One of the things that is common for a seller when they sell a home is that they will prorate the property taxes to their buyer. The title company will do this evaluation for you when you close and as they disperse funds. The basic concept is that they look at what your home's estimated taxes are for the year you sell, then they divide that number by 365 (for the amount of days in the year) then they times that number by the amount of days that you have owned the home for the year. Then that will be paid toward the buyer. They then have those funds for when they need to pay their property taxes at the end of the year. I cannot give you an average amount for this, though I can help you calculate it. It varies depending on when you sell and how much your property taxes are.

Real Estate Agent Commission

It is common, though not necessary, to sell your home using a Real Estate Agent. The cost of this too will vary. It depends on who your agent is and what they charge. Some can be flat rate and others will be percentage based. The common one is percentage based. I will explain what I charge. I have listing packages with a 6% commission and a 5% commission. See those packages here. 6% I offer more services but it will make your property more marketable and potentially get you more profit. 5% I do a more basic listing services but will still get your home sold.

This will be your most expensive expense when selling your home. I'll explain briefly how that commission is broken down.

A commission is broken down toward four groups. Listing Broker, Listing Agent, Buyer's Agent, and Buyer's Broker. So that large number you are seeing isn't going just to the listing agent. Have of the percentage is usually used as Buyer's Agent's Commission. That is to entice any buyer's agents to bring their clients to your home. That is a common sales technique used in many businesses. The common example I use is grocery stores and milk. Have you ever noticed that milk is at the back of the store? Grocery stores typically lose money or break even when they sell milk, but it is a product almost everyone gets. So it pushes you to the back of the store. While you're on your way to the back you'll pass the oreos and cereal which you have a high chance of grabbing and they make a large profit margin on. Buyer's Agent's Commission is the same, it will get more people into your home and potentially help you sell your home for more. I have created a list of reasons for why you should use an agent. Scroll to the bottom section of this page to read more on it.


Sometimes as you are getting your home ready to sell or as a buyer does due diligence on your home there will be defects that are found that will need some correcting. This is fully negotiable. Many sellers pay for this out of pocket before they close but it is possible to find a contractor who will do the work and postpone payment until settlement of the home. That makes it so you can pay for it out of the equity of selling. This amount all depends on how much you want to repair on your home.

Any Negotiated Buyer Expenses

In this market it isn't as common, but sometimes a buyer will ask for help with their purchase expenses. Like closing costs, or ask for a home warranty. This is all negotiated during the time of the contract. Again this is taken from your equity and the number is unknown until you reach an agreement with your buyer.

That is the list. Sadly there isn't very many flat rate fees. All are very based on what is negotiated in the contract or a percentage of price of the home. But at least it gives you an idea of what expenses to look for as you prepare to sell.

Thanks for your time a you read through this blog. I truly appreciate it. If you are thinking of selling get the step by step First time Home Seller's Guide for free. If you want help in pricing your home click here. If you have questions and just want to schedule a time to chat click here.

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