When buying a home, homeowners are often surprised by hidden costs. While your loan officer might have been upfront with you about the total cost of purchasing the house and renting it out, they may not be forthcoming when it comes to other related expenses like property taxes and insurance costs.

The “homeowner expenses list” is a helpful tool that can help you to budget for your home. It will show you the 15 hidden costs associated with buying a house.

15 hidden homebuying costs that could blow your budget

Selling a house is one of the most profitable financial transactions a person can do. Many house sellers, particularly first-time home sellers, are unaware that it may be rather costly. The average amount paid by house sellers when they sell their home is above $15,000.

On the front end, there are clearly methods to cut seller expenses. You might sell your property to a cash buyer, an iBuyer like Offerpad, or an innovative online brokerage like Redfin or Ideal Agent (which has revolutionized the paradigm by paying agents a fixed salary rather than commission and providing rebates to purchasers). Any of these options will save you money, but they may come at the expense of customer service.

The money you spent into your home before selling it is a terrific investment that will almost certainly pay for itself — and then some. So, where does all of this pre-listing cash go, and how does it help you get a higher selling price? Continue reading for an explanation.

Prostock-Studio / iStock contributed to this image.

1. Obtaining an unbiased appraisal


One of the most critical pre-listing activities for sellers is pricing. If you overprice your house, you’ll turn off a lot of potential buyers. If you price it too cheap, you’ll receive a lot of attention but miss out on thousands of dollars.

An independent evaluation may provide you with a professional judgment on the value of your house, taking into consideration its particular characteristics and condition. This is crucial information for determining the best list price for your house.

The house appraisal is usually done later in the sales process.

It’s done by the buyer’s lender, who wants to make sure the home’s worth matches the amount of the mortgage, and the buyer pays for the appraisal. It’s doubtful that they’ll accept your assessment for this reason, but you won’t have to pay for a new one either.

An independent house evaluation will cost between $300 and $500 on average. Larger properties take longer to appraise and are more expensive than smaller ones. Homes in places with very high living expenses will also cost you more than typical.

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2. Home Staging by Professionals


Professional home stagers understand what potential buyers want to see in a house and how to present your property in the best possible light. Bringing in new furniture, decorations, and even artwork, as well as modifying the arrangement of major rooms in the home, is sometimes required.

According to Realtor.com, a professionally prepared property sells for 20 percent more and 88 percent quicker than an unstaged home. That’s a significant edge!

The cost of home staging is determined on the size of your house and the amount of work it requires. However, you could expect to spend $500 for an initial consultation and then $500 to $600 each month for each staged room. Because you’re effectively renting furniture, furnishings, window treatments, lighting, art, and other items from the staging firm, you’ll pay on a monthly basis. You’ll pay much more if you’re selling a barren, empty property since it requires more effort to seem lived-in.

Furthermore, many professional home staging businesses want you to commit for a certain period of time, generally about three months. Even if your house sells after the first open house, you’ll be responsible for the money.

DepositPhotos.com provided the image.

3. An inspection prior to listing


Having your property inspected before it goes on the market ensures that there are no unpleasant surprises that might cause your sale to fall through at the last minute. According to Zillow, 15% of house transactions are canceled at the eleventh hour because the buyer discovers something unpleasant during the inspection.

By doing your own inspection, you’ll be able to address any issues before your property goes on the market, whether it’s a foundation crack or a termite infestation.

Even if a buyer’s inspection does not delay your sale, it may cost you money. If a buyer’s inspection uncovers issues with your house, they may request repairs or a closing credit, which will not diminish the selling price of the home but will come out of your pocket.

If you choose to have repairs done, the odds of the buyer allowing you to undertake them yourself are limited. They’ll very certainly want them done by a competent contractor, maybe one they handpick. That’ll set you back a lot more than if you did your own repairs before selling.

A pre-inspection will cost you anything from $300 to $500 on average.

Credit: istockphoto/monkeybusinessimages

4. Repairs before selling


If you’ve lived in your house for a time, you’ll almost certainly need to do some repairs before putting it on the market.

This might involve major repairs such as a new roof or foundation, aesthetic repairs such as painting or having your yard groomed, or minor repairs such as replacing dead outlets or doorknobs. You may also think about replacing your flooring or remodeling high-use areas like the kitchen or bathrooms.

Your repair costs will be determined by the age and condition of your house. Pre-sale repairs typically cost roughly 4% of the total selling price. The average selling price of a property in the United States was just under $478,000 in Q4 2021, hence the average cost of pre-sale repairs was just over $19,000.

Dima sidelnikov/istockphoto contributed this image.

5. Photographic Services for Real Estate


Professional real estate photography isn’t just for show. High-resolution images can attract more attention to your house and help it sell quicker and for more money.

According to a recent research, properties with professional listing images sold 50 percent quicker and 39 percent closer to the original list price than ones without. Professionally photographed items received roughly 120 percent more views than those without.

Professional real estate photography typically costs between $300 and $500, however it might cost more in high-priced regions.

This is normally just for images; expect to pay more if you want extras like video or a 3D tour.

Feverpitched/ istockphoto contributed to this image.

6. A Property Inspection


Property boundaries are frequently clearly defined in contemporary developments, due to fence lines, symmetrical lots, curb cuts, or even metal property pins discovered using a metal detector.

If you’re selling an older home, particularly one that hasn’t been on the market in a long time, the borders of your property may be a bit more hazy. Buyers may be put off by a lot boundary that runs “from that tree all the way down to the street.” To eliminate any uncertainty, your realtor may request a survey before listing the property. A survey may also be required by your buyer’s lender.

A survey will accurately identify your property limits, preventing potential neighbor disputes. Encroachment disputes often wind up in court, costing thousands of dollars in legal expenses.

A survey may also reveal if the land has any easements. When you provide a utility company access to your land so they may serve a power station behind your house, you’ve granted an easement. This is something that buyers will want to know about.

Finally, a survey may reveal hazards, which can have a significant impact on the property’s future development, as well as elevation, which is a crucial data point for things like flood insurance.

A property survey typically costs between $400 and $600, however you may spend more if you’re evaluating a huge property.

Image credit: istockphoto/mokee81

Costs of Carrying


If you’re selling a house you don’t live in, you’ll have to spend to keep it in good repair. This may include costs like as insurance, electricity, landscaping, and HOA fees while the house is unoccupied, as well as costs such as home staging when it’s time to sell.

You may also want to consider purchasing “empty home insurance,” which will safeguard your vacant property from harm.

The size and location of your property, as well as local utility and insurance rates, will determine your carrying expenses. However, it will almost certainly cost at least a few hundred dollars every month.

Depositphotos provided the image.

8. Getting Your Mortgage Paid Off


If the home you’re selling has an outstanding mortgage, you’ll have to pay it off at closing. This will all happen behind the scenes between the lender, your agent, and the closing business, so that your outstanding debt will already be deducted from your final settlement.

Some sellers are taken aback by the amount they still owe on their mortgage. Contact your lender to find out how much you owe to avoid an unpleasant surprise. You may also acquire a “good faith estimate” from your agent, which will anticipate your ultimate payment when the mortgage is settled, commissions are paid, and other closing fees are paid.

DepositPhotos.com provided the image.

9. Attorney Fees in Real Estate


If you sold your house via an agent, you can probably avoid hiring an attorney. If you advertised your house for sale by owner (FSBO), you’ll almost certainly need a lawyer to review the papers and assist you with the closing process. It’s not a must, but having a lawyer double-check everything can offer you piece of mind – and help you prevent complications in the road.

Real estate lawyers often charge by the hour, between $150 and $350 per hour, but will execute a closing for a flat fee of $750 to $1,250.

DepositPhotos.com provided the image.

10. Lien Repayment


If your property has any liens on it, you’ll have to pay them off before the sale can proceed.

A contractor who wasn’t paid for services done on the property, or another creditor, may have filed a lien on your house. You may either pay off the lien or go to court and petition a judge to remove it. In any case, you’ll have to pay off the lien before your house can be sold.

DepositPhotos.com provided the image.

11. Purchase a Home Warranty


You may want to acquire a house warranty to attract buyers, particularly if you’re selling in a hot market.

For a defined period of time — generally no more than a year — a house warranty covers probable faults in home appliances and critical systems. A home warranty may comfort a buyer that any issues with the property would be addressed early on in their ownership.

The price of your home warranty will be determined by the size of your house and the scope of your guarantee. A one-year house warranty, on the other hand, is usually a few hundred dollars and seldom exceeds $1,000.

DepositPhotos.com provided the image.

Costs of Closing


Closure expenses are a collection of minor to medium-sized transaction charges incurred at the time of closing. Mortgage insurance, title insurance, prorated property taxes, transfer taxes, recording fees, and loan processing fees are examples of these costs. These expenses are deducted from the selling proceeds at the time of closure.

The buyer and the seller usually divide the closing fees. In a real estate transaction, however, everything is possibly negotiable.

Closing fees, including commissions, are roughly 8% to 10% of the transaction price for sellers.

That works up to $24,000 to $30,000 for a $300,000 home.

That’s a significant sum of money, but there are methods to cut your closing fees. If you’re selling in a hot market, you may be able to get the buyer to pay the majority of the closing fees.

Furthermore, the real estate agent fee, which often amounts to 6%, will account for the majority of your closing charges.

Sellers, on the other hand, have a variety of options for lowering their real estate commission.

SARINYAPINNGAM / istockphoto contributed to this image.

13. Commission paid to real estate agents


This 6% real estate fee is likely to be the greatest single transaction cost associated with selling your property, but if you shop about, you may drastically reduce it.

Discount real estate brokers emerged in the preceding decade, offering full service (or almost full service) selling experiences for a fraction of the cost of a regular agent. Because many of these brokers operate for flat fees or substantially reduced commissions, selling with a cheap real estate broker or a low commission agent may save you thousands of dollars in real estate commissions.

Just keep in mind that the total commission is split between the seller’s listing agent and the buyer’s agent, and you won’t be able to cut the buyer’s agent fee since it serves as an incentive for brokers to attract buyers to your house. (In other words, if you lower your buyer’s commission, buyer’s agents are less likely to send customers to see your home.) Any commission savings will come from the listing agent’s 3% commission split.

DepositPhotos.com provided the image.

14. Seller Compromises


Remember how we stated that practically every aspect of a real estate deal may be negotiated? This applies to both the buyer and the seller.

Buyers sometimes request concessions to pay expenditures such as their share of the closing fees or repairs for faults discovered during their inspection. They may even ask you to leave appliances, certain furnishings, or lawn furniture behind.

Requests for seller concessions are more typical in a buyer’s market, but they’re not uncommon in a strong seller’s market like the one we’re in now. While you may always refuse a request for concessions — particularly if your house has received many bids — it might often be an acceptable price for fast completing a home sale.

DepositPhotos.com provided the image.

Gains on Capital


If the value of your property has increased since you purchased it, you may owe capital gains taxes on the profit.

Take the ultimate selling price of your old house and remove the amount you initially paid for it, the cost of any renovations you made while living there (excluding basic maintenance), and closing expenses to determine your capital gains on a home sale.

These are your capital gains, which might result in a hefty tax burden.

Individuals, on the other hand, are eligible for a capital gains tax exemption from the IRS. Your tax payment will be decreased if you have resided in the house for at least two of the preceding five years. You won’t have to pay capital gains tax on the profit if it was your principal residence for the previous five years and your net profit is less than $250,000 ($500,000 for married couples), as long as you haven’t used the exclusion in the previous two years.

This post was syndicated by MediaFeed.org and first published on Realestatewitch.com.

DepositPhotos.com provided the image.

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Prostock-Studio / istockphoto contributed to this image.


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