Hidden Costs of Selling a House – Traditional Way
Before you sell a house through a real estate agent, it’s a good idea to be aware of the costs involved.
It’s easy to just dive right into it because you want the process to be quick and want your investment to be liquidated. But, if you don’t learn how much it costs to sell a house, you may be in for a big surprise.
To have the best possible experience while selling your house, it’s important to understand the following costs in a traditional sale:
Realtor Fees
An agent’s commission is the biggest fee you will need to pay when selling a house. In the state of Minnesota, you’re looking at an average range of around 3% – 6%. For example, if you are selling your house for $300,000, with a 6% realtor fee you would be paying $18,000 in commission costs.
Fees Required for Closing
Your closing company or the real estate agent you’re working with will let you know the exact figures on this. But, in a nutshell, the seller needs to pay closing costs. Specific items included as part of closing costs vary from state to state. It may include, but is not limited to, the following:
- Credit report fee
- Loan origination fee
- Attorney’s fees
- Inspection fee
- Appraisal fee
- Fee for Title Insurance
- Title search fees
- Escrow deposit
- Recording fee
Other Possible Fees – Taxes and Utilities
It’s possible for the seller to pay taxes and utilities up until closing date of the sale. In Minnesota, it is possible to make a sale tax-free, but you’d have to meet certain criteria. Below are helpful resources for taxes and selling real property in the state of Minnesota:
HOA Fees
HOA stands for Homeowners Association. Most sellers don’t really know about HOA fees up until closing. HOA fees vary. Usually, you would need to pay a monthly fee. In some cases HOA fees are determined by the house’s selling price. It’s also common for transfer and status letter fees to be charged to either the buyer or the seller. The costs could be split depending on what’s stated on the purchase contract, but you only have to pay for HOA fees if you’re in a neighborhood with an HOA.
Is it possible to decrease the cost of selling a house?
Now that we know the fees that could be involved, let’s answer this fundamental question of whether it is possible to lower down the costs of selling a house. The answer is YES if you are selling the non-traditional way. Instead of going to a real estate agent, consider selling to an investor as an option. There are still closing fees involved, but the whopping 6% commission fee is skipped. That’s 6% of the total price that you can spend on something more useful. Again, this would amount to $18,000 in savings on a $300,000 house.
In summary sellers can reap the following benefits when working with investors:
- Save money on commission
- Get cash quickly
- Get offers quickly
- Close quickly
- Less stress
- Negotiate on payment of closing costs with the investor.
So, think about what’s best for you and your situation before contacting a real estate agent to work with.
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