So, you have decided to sell your home and move ahead in your life. That’s just amazing! But you cannot just sell your house and reap a handsome profit. Selling a property isn’t just one big fat cheque waiting for you. In order to sell your house, you have to take care of many expenses, which can take a good cut out of your profit.
What happens in a typical real estate transaction is that as a seller, you have to spend about 10 to 15% of your home’s sale price on expenses. With the average home selling price being USD 500,000 in 2022, the expenses come up to USD 75,000.
This, we think, is the best time to introduce to you the fact that there are cheaper ways to sell a home. You can save money by cutting costs in the home selling process in a lot of ways. But the thing is that in the process, you would have to make some decisions as per your unique situation.
In this blog, find some of the cheapest ways to sell your house by owner and the best tips to maximize your profit in home selling.
Following are some of the costs associated with selling a house:
- Agent commission
Did you know that the biggest cost you’d incur when selling a house is a real estate commission? Generally, the real estate commission ranges from 5 to 6% of a home’s sale price. So if your home sells for USD 500,000, you’d have to give away USD 25,000 to USD 30,000 in commission. While you can negotiate a lower percentage with the realtor if your house is in high demand and supposed to sell quickly, a big fat commission still goes to the realtor.
You can waive off the agent’s commission completely by selling your home for sale by owner. But then you have to perform all the duties of an agent like staging, listing the property, negotiating with buyers, processing the title transfer, drafting the contract, etc. Such responsibilities are often challenging, making for sale by owner a difficult but cheap option.
- Closing costs
Generally, you, as a seller, have to make concessions to make your offer attractive and pay closing costs. Depending on your negotiations, buyers may request you to pay HOA fees, title insurance, or property and transfer taxes. Your buyer may also ask you to pay a brokerage fee, a courier fee, and an escrow fee. If you take the help of an attorney for the paperwork, you will also have legal fees to pay during the closing of the sale.
While most sellers can avoid paying capital gains tax on a home sale, you might also have to pay capital gains tax. Also, if your home is in a buyer’s market, you may be required to pay some of your buyer’s closing costs as well. Overall, closing costs typically make up 2 to 4 percent of a home’s sales price.
- Repairs and renovations cost
While the costs listed above are a part of a real estate transaction, there are other expenses you’ll have to make like the ones on cleaning, staging, home maintenance, hiring a photographer, etc. to make your home look attractive and appealing in the market.
Home repairs can range from fixing minor cosmetic issues like broken roof tiles or peeling paint to major defects like structural defects and plumbing issues. If you are adding square footage or knocking down walls, the renovation cost can build up fast as mechanical changes cost more than cosmetic ones.
- Staging costs
Home staging increases the chances of a home’s sale by increasing its appeal. As per the National Association of Realtors, home staging can increase the value of your home and fetch you better offers. You can hire a professional stager to spruce up your home’s interiors. Staging costs depend upon the number and size of your rooms and the amount of work required. Staging costs can range by thousands. If you don’t want to spend too much on staging, new flooring, a fresh coat of paint, and strategically placed flower pots can do the job.
- Inspection fees
A pre-sale home inspection can help you find out any problems associated with your property before a check by the seller’s inspector. Home inspection costs about USD 400 but is well worth the investment. You can also use the inspection report to attract prospective buyers.
There are many alternative ways to sell your house without spending too much money. Below are some of the cheapest ways to sell your house:
- Using the services of a flat fee agent
Flat fee real estate agents do not charge the usual percentage commission but a fixed flat fee to sell your home. If your home is expensive, working with a flat fee agent can save you a lot of money.
But listing with a flat fee agent that charges the cheapest realtor fees has its drawbacks. A flat fee agent doesn’t perform all the functions a full-service agent does. However, you find flat fee companies that offer competitive prices and also offer major services.
- Selling your house for sale by owner
Selling your home for sale by owner or FSBO means that you have to take care of the showing, the marketing, and the negotiating of your property. As an FSBO seller, you have two options. You can either sell your home by yourself or get partial assistance.
When selling FSBO, you can use online platforms like Zillow, Facebook, Craigslist, and a host of other sites to market and sell a home by yourself. You can avail of partial assistance by using the services of a flat fee listing agency like Houzeo that can put your home on MLS, where it gets visible to agents across the state and country. By selling your house FSBO, you only have to pay a buyer’s agent commission and save much of your realtor commission.
- Selling your house to an investor
You can sell your house fast for cash by selling it to an investor. You may close the deal within two weeks or less but with this, you get a steep discount on the sale price. While you can save on renovation costs and sell your house fast for cash, you may end up getting less money for your home.
Consider selling your house to an investor only if your home needs critical repair, you want to avoid foreclosure, or just inherited it. Before closing your home sale with an investor, make sure that you hire a realtor and an attorney to cover all your bases.
- Selling with owner financing
You can also sell your home with owner financing. In this option, you provide a loan to a buyer to buy your home that the buyer pays back in monthly mortgage payments. So, you provide the loan to your buyer instead of a traditional mortgage provider.
The house acts as collateral in case the buyer defaults. In order to offer owner financing, the house must be completely yours with no mortgage left to be cleared. With this option, you get a larger down payment and a relatively high-interest rate.
Selling with owner financing is best for homes priced less than USD 40,000 as banks don’t give loans for homes below USD 40,000. It is important to check the creditworthiness of your buyer before you close the deal. You can hire a mortgage loan originator to do that as well as help you with the process.
You can take one of the routes listed above to spend the cheapest realtor fees in selling your home. Some of the above-listed ways may not fit you but you can find a good option by looking for more options.
You may not require a full-service realtor to sell your real estate property as per your level of experience, type of market, and the time and effort you’re okay to put in. But the experience, expertise, and negotiation skills of a professional real estate agent can really help you sell a home. The best and the cheapest way to sell a house is to go choose a flat-fee MLS service provider like Houzeo that helps you pay less and gets you adequate services.