Millions of Americans strive for homeownership, an accomplishment often included in the concept of the American Dream. There are numerous benefits to homeownership, such as building equity, potential future profits, the freedom to make changes, and independence.
Buying a home is a complex process, and selling that property is no different. When you sell a primary residence or rental property, you can use the equity you have built and property appreciation to make money.
However, the home sale process can be overwhelming for many, so they hire real estate agents to help facilitate transactions. If you are confident in your ability to sell the house yourself, there is always the for sale by owner route. There are several things to consider, such as a transfer tax, existing mortgage, and seller closing costs.
So, how much does it cost to sell a house yourself?
Types of Selling Options Home Owners Have
There are two primary pathways to selling a house: with the assistance of a real estate agent or by yourself. Choosing to forego the services of a realtor is considered FSBO selling. Let’s break down these two options and their potential costs.
Traditional Sale with a Real Estate Agent
Most homeowners will enter the home-selling process with the help of a real estate agent. This professional will help facilitate the sale, including marketing, scheduling viewings and open houses, determining a list price, handling asking price negotiations, and eventually closing the deal.
Before the closing process, you will pay numerous fees as the seller. Realtor commissions will make up a large percentage of your closing expenses. On average, sellers pay 5-6% of the home’s final sale price to the agents involved in the transaction. This includes your agent and the buyer’s agent commission rates.
Other closing costs can include legal fees, title insurance, transfer taxes, prorated property taxes, settlement fees, and recording fees. You may have to pay professionals to increase curb appeal or for real estate photographers. Photographers can cost a few hundred dollars.
Some people pay more money before their house is listed on the housing market. Professional marketing materials, home inspections, and other services may cost you additional money before the home is even advertised on a multiple listing service.
Selling By Owner (FSBO): Potential Savings and Costs
If you take the FSBO route, there are several opportunities to save money. The first and most obvious expense you can avoid is the fee for your listing agent.
Realtors can cost sellers 5-6% of the home’s sale price on the closing date. If you sell a home worth $200,000, that could mean $10,000-$12,000 that you lose out on. You may still pay some commissions if you work with the buyer’s agent.
As an FSBO seller, you will still pay most closing costs, including attorney fees, transfer expenses, etc. However, additional costs, such as marketing costs for a promotional campaign, may be necessary. Most home sellers will invest some money in cleaning and home improvements to prepare their properties for potential buyers.
These improvements can increase the sales price. However, the higher price can make your home less appealing to buyers, especially if it’s a seller’s market.
The FSBO process can save you money and give you more control over the sale of a home. However, you must be willing to take on all the work that an agent normally does and incur some of those costs yourself.
Breakdown of Costs When Selling FSBO
An FSBO sale can be a great solution for some sellers. You may want greater control over the process, or you want to save on agent commissions. Whatever your motivation, there will still be costs before receiving any sale proceeds. Here are some areas that will require investment when selling your house without a realtor.
Pre-Listing Expenses
Pre-listing expenses can make up a significant chunk of your upfront investment. The house must be prepared for sale to appeal to prospective buyers. If substantial home repairs are needed, you may have to pay for them before buyers consider making offers. The house must also be cleaned so visiting buyers can imagine their lives in the space.
You should stage the home and take photos of the house, which may require the insight of a professional. Finally, if you want your property to look its best on online listings, flyers, or social media posts, you may need to hire a professional real estate photographer.
Marketing and Advertising Costs
Speaking of advertising your home, marketing the property without an agent could cost you. Typically, the agent would include materials in their commission rate, such as creating yard signs, flyers, and online listings.
For FSBO listings, the seller must do all the advertising work themselves. You may need to print physical materials or accrue costs for online advertising. Running an open house could also cost money to make these materials or offer small gifts to potential buyers.
Legal and Paperwork Costs
One of the main benefits of hiring a realtor is avoiding many logistics involved in the sale. You must pay for a real estate attorney in some states, though most FSBO sellers will hire legal professionals no matter the regulations. There will be contracts, disclosures, and title transfer tax fees associated with the transaction, which you will have to pay.
Closing Costs
FSBO sellers pay for numerous selling costs. Depending on the agreement between you and the buyer, you could also pay some of the buyer’s closing costs. Typical expenses include escrow, title insurance, recording, and more. In total, most sellers should expect to pay 9-10% on closing expenses when they sell a house, though this can be reduced if no agents are hired.
Property Taxes and Other Potential Costs
The cost to sell could also include expenses related to the home itself. Home warranties, pre-sale home inspection fees, moving costs, prorated property tax bills, HOA fees, and other elements could increase your costs when the sale occurs. There may even be capital gains taxes if you didn’t own the home for very long or if it isn’t a primary residence.
Estimating the Total Cost of Selling FSBO
The cost of selling a home can vary widely depending on the condition of your house, its location, cost of living, and the local real estate market.
While closing costs will impact your expenses significantly, the money you make from the sale depends primarily on the property value. Ideally, you can sell the house for much more than you paid, resulting in profits that easily cover all your selling costs.
Creating a Budget and Tracking Expenses
Before you start the process of selling your house, it is essential to plan a budget. Consider all the closing costs and remember the extra costs associated with the FSBO strategy. Consider if the amount of work you must do is worth avoiding the costs of hiring a realtor.
Use these estimates to determine a good selling price for the property that will help cover those expenses. Also, track all your expenses to ensure you are on track to pay for everything and still make some money on the deal.
Potential Savings When Selling FSBO
The main motivation for selling a home without a realtor is to save money. Although it will require more work, you may decide this effort is worth the savings. Here are a few ways you can save money by foregoing a realtor’s services.
Avoiding Realtor Commissions
Commissions for a realtor can be hefty. They do a lot of work behind the scenes to facilitate the transaction and want to be compensated fairly when the deal goes through. The typical cost for a realtor commission is 5-6% of the sale price, which can significantly cut into your profits. If you deal directly with serious buyers, that expense will disappear.
Negotiating with Buyers Directly
Agents typically help with the negotiation process. A buyer will make an offer on your home, and you can return with a new number. Eventually, both parties will agree on a final price and sign the purchase agreement. However, you can negotiate this and try to get a better price for your house. Leaving it to an agent could lower prices and lower sales profits.
Selling to a Cash Home Buyer
Selling a home is expensive, no matter how you slice it. However, you can cut out many headaches and extra expenses by selling to a cash home buyer. Cash home buyers can facilitate faster sales, cover many closing fees you normally pay, and buy properties in any condition.
A-List Properties can purchase your home for a fair cash offer in 14 days or less and help you avoid numerous closing expenses. Plus, you can skip the repair costs and cleaning usually required before selling to a traditional buyer.Call our team today at 972-526-7042 or complete the online form.
Zach Shelley
Zach Shelley is a seasoned real estate investor with a diverse network spanning across the nation. As the founder of his own real estate venture, Zach is committed to offering innovative solutions to homeowners facing various real estate challenges.. Through his dedication and strategic approach, Zach continues to make a significant impact in the real estate industry, providing homeowners with alternative pathways to navigate their property transactions.