Oh, the joys of home ownership! You saved up for years and finally bought the home of your dreams. Then, if you’re like many people, you realize it costs you way more to own a home than you had budgeted.
Time passes, you get into a groove that allows you to actually afford your home, and then life happens and you need to sell it.
It’s easy to start looking at comparable home sales in the area and see dollar signs. If you’ve owned your home for a few years, you’ve likely built up equity in your home so it may look like you’ll make a sizable profit at closing.
Then reality sinks in. Turns out, besides there being hidden costs to owning a home, there are also hidden costs of selling a home!
1. The Not-So-Hidden Hidden Costs
Since you’ve already purchased a home, you’re probably well aware that closing on a home involves fees. You’ll pay closing costs to the lawyer or title company that handles the closing paperwork, and you’ll pay a commission to the Realtor. You should also check the terms of your mortgage to ensure you won’t face a prepayment penalty.
All of these things will eat into your potential profit. Closing fees and commissions vary by housing market. Ask around and do research to ensure you aren’t paying more than you have to, though.
2. Organization / Storage
If you’ve lived in your home for a few years, then chances are you have at least one closet that’s overflowing. Your Realtor will probably tell you the more organized your home is, the faster it will sell. If your closets are crammed full and shelves are disorganized, buyers tend to think this is how their own belongings will look in the space.
Since they assume the space will be disorganized, they’ll often pass up the home saying it’s “too small” for their needs. Even if you have huge closets in every room, they might say the home didn’t contain enough storage space.
That’s why it’s smart to organize your home before listing it on the market. At best, this means you might quickly hold a garage sell to get rid of excess items (and make some money). At worst, you might need to rent a storage facility if you really can’t get rid of anything. Depending on the size of the storage unit and how long the house is on the market, this expense can add up.
3. Making Repairs
Maybe that leaky sink hasn’t bothered you. The way the door creaks when you close it is a nuisance, but you’ve never done anything about it. The kitchen drawer closes just fine if you lift and twist it.
No matter how well you’ve cared for your home, there’s bound to be a few things that need a little attention before potential buyers walk through. To save money, attempt any repairs to the best of your ability. However, don’t start repairs you’re unsure about. Sometimes you’ll do more harm then good, ending up with a much more expensive professional repair in the end.
While we’re talking about repairs, let’s discuss Murphy’s Law, too. Murphy’s Law says “everything that can go wrong, will go wrong”. The moment you list your home for sale, expect at least one major appliance to break!
Be careful about replacing the appliance with an obviously cheap model; it can be a turn off to buyers. Instead, check Craigslist for used appliances. The buyers will never know you weren’t the one who used them!
Lastly, many buyers will request repairs as part of the home inspection process. You can decide to credit them or you can make the repairs in the requested time frame. It’s often cheaper for you to manage the repairs, but it can be stressful to get them done inside a short window – especially while you’re managing a move.Getting ready to sell your home? Prepare yourself for these 9 hidden costs! Click To Tweet
4. New Coats of Paint
Some people rush off to paint their whole house before selling it, following the traditional wisdom that buyers love neutral paint. Paint colors are such a personal choice, that it probably doesn’t matter if you repaint or not. Some buyers will love the neutral beige and some will complain that it’s boring.
However, if you have damaged walls that need repairs or paint that’s in poor shape, your Realtor is probably going to recommend some paint. Again, if you can handle the painting yourself, you’ll save money.
5. Trashing Old Belongings
If you’re selling your home to move cross-country, chances are you’re looking to take as little with you as possible. You might hold a garage sale and/or donate many items. Perhaps you’ll also sell some things on Craigslist.
It never fails, though. As you start packing up your belongings, you find broken things, things that are missing pieces, and things that are only meaningful to you (like that Christmas ornament you made in third grade). You either have to take it with you or trash it.
When we lived in Houston, it was acceptable to put trash bags beside the trashcan on the curb. Basically, you could set out an unlimited amount of trash every week. On the flip-side, at our most recent home, we were limited to what could fit inside our small trash can.
As we began packing up, we quickly realized we had too much trash to fit in our can. We had a couple of options: run several loads to the dump or rent a dumpster. For the convenience factor, we opted for the dumpster. That ran us a pricey $500.
Don’t get too excited about the list price of the home; in many markets, you’ll end up accepting an offer that’s less than the list price. On top of that, your Realtor might suggest allowances.
The most common allowance is a flooring allowance. If the carpeting is stained, hardwood floors are scratched, or tile is broken, you don’t have to replace it. You can offer the buyers an allowance.
Our current listing includes an allowance for floor refinishing. The hardwood floors in the kitchen area have seen better days; we chose not to do this ourselves before listing because we were in a hurry to get the house listed.
7. Moving Costs
Don’t forget that once the house sells, you have to move out! Depending on how many belongings you have and how far you’re moving, this can range from a few tanks of gas to tens of thousands of dollars.
While it’s easy to think you can fund your move from the equity in your home, you’ll likely have to be out of your house before the sale is finalized. Have a plan in place.Selling your home doesn't equal instant profit. Be wary of these 9 hidden costs! Click To Tweet
8. Pet Sitters
Generally, homes sell better if they don’t have pets living there. Some people with allergies will refuse to even see a home that has a pet inside. Your barking dog might also disturb potential buyers enough that they leave quickly and don’t get a good feel for the home.
The cheapest thing to do is to take the pet(s) with you during the showing. Unfortunately, some markets have frequent short-notice showings. We when lived in Houston, we showed our home almost every day for six weeks. Many showings were booked only 1-2 hours in advance; I couldn’t take off work every day (and on short notice) to get my dogs out of the home.
Another option is to pay for pet daycare. This can be a pricey option, depending on how long the home sits on the market. You can also ask around to see if anyone can be “on call” to help out.
A recent study suggests staging a home doesn’t help it sell faster or for more money, so pass up the professional stagers. However, you might need to do a little bit of staging to show your home in its best light. This is especially true if you get the same negative feedback from more than one perspective buyer.
For example, if buyers keep saying the entrance is “blah,” “bland,” or “boring,” it’s clear that a little pizazz might help the home sell. A painting, some flowers, or a tasteful statue might be the trick. You can probably re-purpose items you already have. If not, check resale shops, Craigslist, or yard sales.
If you’re tight on money while you wait for your home to sell, have an honest conversation with your Realtor. If they have several costly suggestions, have your Realtor prioritize them. Sure, maybe paint is important, but is it more important than repairing the leaky faucet? What items do they think are show-stoppers for most buyers?
You can also check with friends for their honest opinion. Invite over friends or coworkers who’ve never seen your home before. Get their honest assessment on what things they’d be looking for as a buyer. Coupled with the Realtor’s input, you can rest assured you’re spending money on the right things.
What costs surprised you when you sold your home? If you’re thinking about selling your home, did you think about all the costs covered here?