How much does it cost to sell a house?

With all of the chaos that comes with the home-selling process, it’s common for prospective home sellers to overlook the costs of offloading their property. Some expenses are negotiable, but sellers should still expect to foot all or part of the bill for the various costs to sell a house, including taxes and closing costs.

How much will it be? Plan for a chunk (at least 5 percent) of the purchase price to cover real estate agent fees, which are typically paid by the seller. Add to that costs like attorney fees, notary and filing fees, title-related fees and all the other little administrative expenses that go into sealing a deal. Depending on your state, there may be be property taxes and transfer taxes; if you’re paying off a mortgage, your lender will probably have a few charges for you, too.

It’s good to be prepared, so you won’t get a sickening shock when the final figure on your closing statement is less than you, well, figured. Here’s a rundown of typical seller costs, and about how much they will run you.

How much are real estate commissions?

The real estate commission is usually the biggest fee a seller pays — historically somewhere between 5 percent to 6 percent of the sale price. So, if you sell your house for $300,000, say, you could end up paying $18,000 in commissions.

The commission is split between the seller’s agent and the buyer’s agent. In most cases, the seller bears this cost. You may be able to negotiate a lower commission, however. Real estate agents could be more likely to accept a lower rate when the home is expected to sell quickly, the local market is strong or the home price is relatively high.

Many homeowners try to avoid paying commission by not using an agent and listing their home as for sale by owner (FSBO). If you do that, be prepared to assume the duties of an agent, including showing the place to prospective buyers, negotiating and handling things like disclosure statements. Just 10 percent of home sales in 2021 were FSBO sales, according to the most recent data from the National Association of Realtors (NAR). Furthermore, those homes sold for much less — $225,000 for the average FSBO listing, versus $330,000 for listings with an agent. So, while it’s an expense, finding the right agent can pay off in a big way and help you negotiate a better price.

Another reason to work with an agent is that someone with expertise in the market can advise you on the best time to sell, which can limit the length of time your listing sits on the market gathering dust. If it takes a while, you could be stuck with what are commonly known as carrying costs: ongoing mortgage payments and homeowners association (HOA) fees, for example, while you’ve already moved into a new place.

Unavoidable expenses

When you’re selling your home, there are a number of non-negotiable expenses that will eat into your net proceeds. The following examples might not apply in every sale, but when they do, they’re hard to avoid.

Closing costs

In a real estate transaction, many closing costs are the buyer’s responsibility. But there are closing costs for sellers as well. Don’t be surprised if you are asked to foot the bill for some of the buyer’s costs, too — it’s been somewhat rare in the seller’s markets of the last few years, but it may get more common as sales slow, as they’re currently doing. In 2021, the average closing costs for a single-family home were $6,905, according to ClosingCorp.

Some of these common seller’s costs may include HOA fees, a pre-listing inspection, recording and settlement fees and title insurance. You also may be asked to pay an escrow fee, a brokerage fee and a courier fee. Additionally, if you have hired a real estate attorney to help negotiate the contract, the fees for his or her services will be due at closing.

Utilities

Even if you plan to move out before you sell your home, you’ll want to continue paying for water and energy. A home without air conditioning, heat or lighting can be difficult to show to buyers, and could even damage the home. Your current bills will give you an idea how much it will cost each month to leave on the utilities until a new buyer moves in. However, since you won’t be living there, your usage will be down, of course; and you can take other steps to reduce your utility bills as much as possible.

Mortgage payoff

The proceeds of your home sale will be used to pay off your mortgage, but the payoff amount on your mortgage statement is likely to be a little less than what you actually owe. You’ll probably have to add prorated accrued interest to the total balance. Additionally, you might have to pay a fee if your mortgage carries a prepayment penalty (check your loan documents or contact your lender to find out).

Selling one house and buying another? Use Bankrate’s calculator to determine how much house you can afford.

Capital gains taxes

Don’t forget to consider how selling your home will impact your taxes. When you sell a home for more than you paid for it, that counts as a capital gain and needs to be reported on your federal tax return if it’s above a certain threshold.

The good news is, many homeowners are eligible to exclude up to $250,000 of profit ($500,000 for married couples filing jointly) from their taxes, as long as they haven’t used the tax break on another home sale within the past two years.

The exemption applies if this is your primary residence for at least two out of the previous five years. If you have used it as a rental, you may still be able to use the tax break — consult a tax professional.

Property tax

Sellers also need to remember annual property taxes, which are usually paid in advance. The seller should pay the prorated share of property tax up to the closing date, with the money placed in escrow.

However, if you have already paid taxes for the year, you may actually get a rebate at closing. The buyer will reimburse the seller for the portion of taxes already paid that apply after the closing date.

Transfer tax

Property taxes aren’t the only taxes you may need to cover when you’re selling your home. Depending on where you live, you may need to pay real estate transfer taxes, which is a tax charged by the local government on transferring the 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). Some states also impose mansion taxes, an additional tariff on luxury properties that sell for seven figures or more.

Moving costs

If you’re selling your place, you’re going to have to move all your stuff. Paying for that will set you back between $911 and $2,514, according to HomeAdvisor. However, that price tag can be a lot more if you’re moving several rooms’ worth of furniture or if you’re moving across the country.

If you want to save money on your moving costs, you can consider doing it yourself. Be honest, though. Can you manage all that heavy lifting? You might save money on the move, but you also might need to pay for a massage and take some days away from work after it, too.

Optional expenses

While some expenses are unavoidable, there are other optional costs in selling a house that might help you sell for more money or ensure that the deal gets done.

Pre-sale home inspection

A pre-listing inspection could cost around $340, according to HomeAdvisor data. Some sellers make the investment because they want to find out about any major problems before a potential buyer comes in. Getting a pre-sale inspection allows you to make the repairs ahead of time, removing any possibility of a buyer demanding them later or asking you to lower the price (see Seller concessions, below).

Discuss with your real estate agent whether a pre-sale home inspection is a good idea. Keep in mind that if your inspection reveals material defects, you may have a legal responsibility to disclose them to a buyer.

In addition to paying for a home inspection, some sellers purchase home warranty policies that cover appliances and systems, making a property even more attractive to prospective buyers. The cost for this coverage has a wide range — $222 to $1,850, according to HomeAdvisor — but it can provide extra reassurance for potential purchases, particularly if the home is an older one.

Seller concessions

Buyers sometimes request concessions from the seller, which essentially means that you help cover the buyer’s closing costs. For example, you might agree to contribute a portion of your sales price toward appraisal, title insurance and origination fee.

You definitely don’t have to agree to this, though — particularly if your area is a seller’s market. If it’s a buyer’s market, though, seller concessions can help make a difference in getting a deal to the finish line. Also, even if you’re willing to make concessions, there are limits based on the type of mortgage your buyer is using and how much they are contributing for a down payment.

If the buyer’s home inspection uncovers big issues, such as a damaged roof or bad plumbing leaks, you might have to pay to fix them in order to close the deal or cut the buyer a check to cover them. Big repairs can set you back financially, so be prepared before you decide to sell, especially if you anticipate trouble along these lines.

Home improvements

Before you sell, you might be tempted to complete a project that seems likely to increase the value in a buyer’s eyes. Some renovations can recoup the majority of their value when it’s time to sell. Even a few affordable ways to boost your property’s appeal, like cleaning the windows and sprucing up the landscaping, might be better than selling your home as-is. Most sellers take some kind of steps to enhance their properties. However, before paying to enhance your home’s value, it’s wise to ask a real estate agent whether the cost will be worth it.

“One of the most common mistakes I see from sellers is spending money on the wrong improvements before getting a Realtor involved,” says Charly Marggraf, an agent with Compass in Minnesota. “Often, a seller will hold certain improvements in a higher regard than the general buying public — whether it be finishes that they spend too much money on or have too personal a taste, or landscaping and mechanical updates that they won’t realize a profit from. I appreciate that sellers want to get their homes in great condition before they sell, but if they are making improvements in order to sell, they definitely need to have a conversation with a professional before they spend their money.”

Home staging

Sellers might also consider staging their home to make it more appealing to buyers. The cost to stage a home ranges widely, depending on the size of the home, whether you’re renting furniture and more. Home staging can make a meaningful difference in some situations. According to NAR data, 15 percent of sellers’ agents said that home staging increased a home’s value between 6 and 10 percent. And a well-staged home can lead to a speedy sale: 31 percent of sellers’ agents said that staging greatly decreased the time a listing spent on the market.

In addition to staging the interior of the home, you may want to consider how to improve the exterior with extra love for your landscaping. A well-groomed yard can make buyers feel right at home as soon as they look at photos of your property.

Cost to sell a house: a rundown

Every property is different, so you’ll need to carefully consider what will impact the math on selling your house. To give you an idea of how this breaks down, let’s consider a property purchased for $300,000 four years ago. You made a down payment of 5 percent, $15,000, so your initial loan was for $285,000. You’ve paid down the balance to $250,000. In the meantime, thanks to a surging real estate market, the property will sell for $365,000. But how much of that $115,000 appreciation will actually be yours?

Common transaction costs you’ll probably pay

Optional transaction costs you might pay

In this scenario, your total costs might range from $279,770 to $296,867. That leaves you with a walkaway profit from that $365,000 sale somewhere between $68,133 and $85,230.

Reducing the cost of selling a house

If you’re looking to trim your expenses when you’re selling a house, you have a few options. You can try to sell the property on your own to eliminate real estate commissions. Keep in mind, though, that this can impact your ability to command a higher price for the property. You might also consider selling to an iBuyer, although the same rule applies: Without an agent to help leverage competition in the market, you might be leaving money on the table. If you do opt to use an agent, consider using a discount broker, who charges a smaller commission.

In addition, scrutinize your optional costs. You may be able to get away without investing in any major improvements or staging; maybe all you need to add is a little curb appeal. If the home is in good shape, you might well find plenty of buyers willing to take it “as-is,” meaning you state upfront you won’t make any repairs or changes.

Frequently Asked Questions

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  What is the average closing cost percentage for sellers?

  When you add up traditional closing costs — transfer taxes, title insurance, attorney fees and escrow fees —  the average percentage of closing costs for sellers tallies up to 1.03 percent of the home purchase price, according to ClosingCorp.
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  Do you make money when you sell a home?

  It depends. If you’ve paid off a significant chunk of your home loan and your property sells for a good price, then yes. If you have only lived in the home for a few years and the value hasn’t changed much, you might just be breaking even. Remember that when you bought it, you had to pay closing costs, too. So, making money relies on waiting long enough to justify those expenses and seeing the value of the home appreciate.
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  Will I lose money selling my house?

  It depends on how much you owe on your mortgage. If you are underwater on your mortgage— meaning you owe more than it’s worth — then, yes, you would lose money on the sale. The good news is that home values throughout most of the country have been increasing throughout the pandemic. It’s a good idea to get an estimate of how much your house is worth before thinking about listing it.
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  What percentage commission do most Realtors charge?

  Traditionally, commission for Realtors has added up to 6 percent: 3 percent for the buyer’s agent and 3 percent for the seller’s agent. However, real estate commissions have been decreasing. In 2022, the total commission payout on a home sale fell to an average of 5.37 percent, according to data from Clever.

Bottom line

Selling a house is exciting. But it isn’t free. As you think about listing your home to cash in on the real estate craze, be sure to have a clear understanding of the fees you’ll need to pay to get a sense of how much money you will actually make.