Today’s housing market is booming. Many sellers in today’s market are having little to no trouble in selling their homes quickly and for top dollar, and this is causing other homeowners to consider perhaps cashing in by selling their homes as well. There could be many reasons behind selling your home, perhaps you have built up substantial equity or a new job is necessitating that you move to a new area. You could be growing your family and running out of room, or the exact opposite as relatives or children move out leaving you with too much space. While selling your home could certainly turn a profit there are financial considerations and costs that come into play when placing your home on the market. Here are three things to think about financially when putting your home on the market.
1. Realtor Fees
The first financial consideration is perhaps the most obvious: realtor fees and commissions. When listing your home on the market with a realtor, the realtor will often collect up to 6% of your home’s sale price in commission. These costs can be avoided by selling your home yourself without the assistance of a realtor, often referred to as FSBO or For Sale By the Owner.
However, FSBO has its own set of challenges to consider, mainly the responsibilities a realtor would typically take on for you. For example, deciding to go the FSBO route, you are responsible for showing and marketing your home to buyers on your own. In addition, many realtors who work with buyers are reluctant to show FSBO properties. Some potential buyers may also be hesitant to buy when a realtor isn’t involved.
Overall, it’s up to you whether to use a realtor. It’s important to consider whether or not you think you can successfully sell your home on your own. If you know your salesman skills are up to the task, but anyone who hesitates may want to truly consider the worth of a real estate agent.
2. Hidden Costs in Selling a Home
Another financial consideration in selling a home is the various “hidden” costs they may come up against. These costs vary by the property and particular situation. Some homes require improvements or sprucing up before being brought to market, either because they’ve grown out of date or have become rather worn down without your notice.
Other times, a buyer’s home inspector may recommend certain home repairs that can range from minor to costly. The challenge with these costs is that they are often unknown to the seller before going to market and can take you by surprise. If possible, it is always best to have spare money on hand when listing a home. Adequate research on what to watch for or areas of your house to concentrate on couldn’t hurt either. This may be enough to cover you when inspection time comes.
3. The Cost of Moving to Your Next Home
Your home is finally under contract, you have overcome all the financial hurdles associated with selling and are ready to reap the rewards (and profits) of all your hard work. Unfortunately, for most people, the money from selling a home does not just become simple pocket money. Instead, that money is often used for relocating and buying a new home of their own. As stated earlier, it is a seller’s market. In a seller’s market homes are often more expensive than when you originally bought your last home.
In addition to the cost of a new home, moving expenses are an unavoidable part of the process. Whether you hire movers or opt for a more DIY approach moving can be costly and time-consuming depending on your amount of belongings and the distance required, not to mention the materials you’ll have to purchase to pack your things away.
All in all, selling your home can be a great decision, especially if you’re ready for a change of scenery or space. Whether you need to upsize, downsize, or relocate, sometimes selling is the only option for a homeowner. While it is a fantastic time to sell your home, be mindful of the financial considerations that come along with putting a home on the market. Deciding whether or not you’re up to the challenge of selling your home on your own, or you find the value in going through a realtor, preparing for the surprise repairs or remodels to get your home market-worthy, and the profit you could make compared with your own costs of moving are all things to especially consider.
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