How Much Does It Cost to Sell My House? A Complete Breakdown

Selling your home might generate a profit, but it can get expensive quickly if you’re unprepared. Knowing the potential costs helps set realistic expectations, budget effectively, and maximize profits. 

Get a breakdown of the most common costs associated with selling a home and tips to keep them in check.

Understanding the Costs of Selling a House

Selling a house is complex. You can’t just turn over the keys; real estate transactions require thousands of dollars, paperwork recorded with the government, and fees. To avoid surprises, align each phase of a deal and the expenses associated with each phase. 

Be aware that the actual costs to sell a house depend on the location, property type, and other factors. Still, across the states, some shared costs are associated with selling a house:

• Real Estate Agent Commissions: This is usually the largest expense for home sellers. Fees usually range from 4-6% of the home’s sale price. Real estate agents provide valuable services in exchange for their fee.
• Closing Costs: These common expenses include title insurance, transfer taxes, prorated property taxes, and attorney fees, among others. Closing costs typically account for 1-3% of the home’s sale price.
• Property Taxes: Homeowners may need to pay prorated property taxes up to the closing date. The amount paid is based on the location and time of year (when the tax bill is due).
• Capital Gains Taxes: If the home’s profit exceeds $250,000 for single fliers or $500,000 for married couples filing jointly, homeowners may need to pay capital gains taxes. Understanding the tax implications can help you plan better.
• Moving Costs: Homeowners may need to pay for moving expenses, such as hiring a moving company or renting a truck. Because moving costs can add up quickly, budget for them in advance.

Real Estate Agent Commissions

Real estate agent commissions are among the highest costs sellers face. Typically, commissions range from 5-6% of the home’s final sale price. In the past, this fee was usually split between the buyer’s agent and the seller’s agent, even though the seller paid it. Changes to regulations have made this aspect more negotiable. How your local real estate market operates may be different or transforming.

To put it in some perspective, if your home sells for $450,000, a 6% real estate commission amounts to $27,000. Usually, the fee is paid through home sale profits. If there’s not enough profit, the home seller could owe the agent the difference in the fee.

There are alternatives for homeowners looking to save, such as:

• For Sale By Owner (FSBO): This eliminates the listing agent’s commission, but you’ll shoulder all the work yourself. That includes ensuring your transaction follows local laws and regulations.
• Discount Brokers: These agents offer lower commission rates or flat fees, though your listing may receive less attention or fewer services.

Remember what the commission includes, such as covering the home’s marketing costs, negotiating the selling price, and contingencies like a home inspection and experienced eyes reviewing the real estate contract.

Closing Costs for Sellers

Once you’ve negotiated a sale, closing costs are the next large expense. Seller costs include:

• Title Insurance
• Escrow Fees
• Transfer Taxes
• Prepaid Fees

Closing costs account for roughly 1-3% of your home’s purchase price. For a $450,000 home, expect to pay between $4,500 and $13,500 in these fees. The actual costs vary by state and your financing. Additionally, some closing fees are negotiable, such as which escrow agent you use and the homeowner’s insurance.

Sellers may pay for buyer incentives or contribute to the buyer’s closing costs, so consider that when tallying estimated closing expenses.

To help track what you’ll pay in closing costs, you may receive an estimated seller net sheet from your real estate agent. You’ll also receive a closing disclosure at least three business days before the closing date. 

Home Repairs and Improvements

Before listing your home, you may decide to make repairs and upgrades to make the property appealing to buyers. These fall into two categories:

• Necessary Repairs: Fixing noticeable damage that impacts home value and time on the market, such as a leaky roof or broken HVAC system. These home repairs are a must before sale if you don’t want the home to linger or achieving the maximum sale price matters.

Example: A $3,500 repair bill for foundation work could make the difference between selling on time or losing a buyer.

• Optional Upgrades: Home improvements like a fresh coat of paint or updated landscaping boost curb appeal and potentially increase your sale price, but they aren’t essential to selling the home.

A $5,000 home upgrade investment might attract higher offers, but weigh the return on investment (ROI) carefully to avoid overspending. Some projects net higher gains than others. A real estate agent can advise based on what’s appealing to home buyers right now and your home’s condition.

Finally, home staging and professional photography, which carry an average cost of $1,844, work to make your home shine online. You don’t necessarily need to stage a home to sell it, but it can help buyers get a sense of scale, space, and flow. Empty rooms are harder to sell.

Mortgage Payoff and Potential Prepayment Penalties

When you sell your home, you must pay off your existing mortgage. To find out your remaining balance, reach out to your lender for a payoff statement. Remember, the closing date matters in how much you’ll owe, so give them an estimate as accurately as possible. Update the servicer and escrow agent if the date shifts for any reason.

Also, check for prepayment penalties. Some lenders charge fees if you pay off your loan early. These penalties can be costly, so understanding your mortgage terms is crucial. If you owe $290,000 on your mortgage but have to pay a $5,000 prepayment penalty, that impacts your bottom line.

Property Taxes and HOA Fees

Sellers are responsible for prorated property tax up to the closing date. Property taxes depend on where you live; assessment values, tax rates, and deadlines are location-based. Some states have you pay a year behind, meaning you’ll owe taxes for the following year prorated to your time of ownership. These must be paid and held at closing.

For example, in the year 2025, your tax bill is actually for the year 2024. If you sell the home in 2025, you’ll still owe taxes through your ownership, to be paid in 2026.

If your home is in a neighborhood governed by a fee-charging Homeowners Association (HOA), you must settle any outstanding dues or special assessments. These costs might add up to several hundred dollars or more for amenity-rich or upscale neighborhoods.

Moving Expenses

How will you get all your stuff from the old home to the new home? Moving costs aren’t cheap even if you go the do-it-youself route. The expenses are based on how much help you need and how far you’re going:

• Professional moving companies charged around $883-$3,569 for local moves (less than 100 miles) in 2024, according to Angi.. A three-bedroom home averaged $1,400.
• Packing services averaged $1,000. That’s just boxing up your goods, not loading, transporting, and offloading.
• Interstate moves averaged $5,000, but the pricing spread grows wider with increased distance.
• DIY moving is cheaper but can be labor-intensive. It might require truck rentals and storage solutions if your new place isn’t ready immediately.

Potential Capital Gains Taxes

When selling a home, you might owe capital gains taxes on profits, depending on the sale price and how long you’ve lived in the home. The good news?

• Tax Exemption Rules allow single homeowners to exclude up to $250,000 in profits. For married or couples filing jointly, the exemption bumps to $500,000.
• If you’ve lived in your home for at least two of the past five years, you may qualify for this exclusion.

Consult a tax professional to determine if taxes apply to your home sale and learn strategies for minimizing liability.

Preparing for the Selling Process

Your home is likely your biggest asset. Selling the house is your chance to tap into the equity you’ve built. Make the most of this opportunity through proper preparation. 

• Determine the Home’s Sale Price: Research the local real estate market to determine a fair and competitive sale price for your home. Tools like a home value calculator provide a starting point.
• Choose a Real Estate Agent: Select a reputable and experienced real estate agent who knows the local market. The right agent brings knowledge that makes a difference in the selling process. The more complex the sale, the more you’ll appreciate their assistance.
• Polish the Home for Sale: Make any necessary repairs and improvements to increase the home’s appeal to potential buyers. Even a deep cleaning works to help the house leave the best first impression.
• Gather Necessary Documents: Collect paperwork like the deed, title, and any outstanding mortgage information. Having these documents ready streamlines the closing process. Additionally, any documentation on the house, like a roof warranty, fireplace inspection, or foundation repair invoice, helps ease buyers’ minds.
• Plan for Closing Costs: Budget for closing costs, including title insurance, transfer taxes, and attorney fees. Understanding these expenses upfront can help you avoid last-minute financial stress.

Taking these steps helps homeowners maximize their profits and achieve a smooth sale.

How to Reduce Selling Costs

Your selling expenses aren’t chiseled in stone. There are ways to slash costs and keep more money in your pocket:

• Sell it as-is: Skip repairs and upgrades, but be prepared for potentially lower offers.
• For Sale By Owner (FSBO): Eliminate the listing agent’s commission but take on all the responsibilities of selling. You may need to pay a buyer’s agent commission to entice more offers.
• Discount Brokerage Services: Save money with agents offering flat fees or reduced commissions. Do your homework to ensure quality service.
• Sell to iBuyers or Cash Homebuyers: These companies buy homes quickly in as-is condition. While you won’t fetch top dollar, it can save time and money on repairs.

Selling a House Costs Money

Careful planning helps maximize your profit from a home sale. Be ready for fees like agent commissions and taxes. Knowing the expenses upfront ensures there are no surprises at the closing table.

Looking for tailored advice and accurate estimates for your home? Consult with a real estate professional today and take the first step toward a smooth and profitable sale!