Skip links

Main navigation

Podcast Episode #274
Real Estate Investing News

Beware of the Hidden Costs of Selling a Home

Listen to the full episode OR Scroll to read the related article.

Learn > Real Estate News > [REN #274] Beware of the Hidden Costs of Selling a Home

Published: June 1st, 2017

How much does it really cost to sell your home? Chances are — more than you might think to cover the costs of repairs, upgrades, staging, commissions, and other fees. Real estate website Zillow and local services marketplace Thumbtack have come up with a figure that can help get you off to the right start.

Money magazine writes that Americans are expected to spent $327 billion dollars this year. And many of those dollars will be spent to spruce up a home before it’s put on the market.

But how much do people typically spend to prep a home for sale?

Zillow and Thumbtack analyzed common expenses associated with the selling of a home, and found that U.S. homeowners spend an average $15,000 dollars in hidden costs to prepare for and to close a sale.

The lion’s share of that figure is for closing costs. For the seller, that’s the agent’s commission, which is typically 6%, and a sales or transfer tax, which is charged in most states. Zillow says that sellers spend an average of about $12,500 for those two costs.

Most of the closing costs are paid by the buyer, but sellers can also expect to pay for a few other smaller fees. They might include outstanding property tax or HOA dues, along with escrow fees and title insurance.

Before closing, sellers need to make the home presentable and that could require anything from simple cleaning to major repairs or upgrades. According to Zillow, more than 8 in 10 sellers will perform at least one of these projects. The five most common home improvement projects include house cleaning, carpet cleaning, interior painting, lawn care, and staging. If sellers pay someone else to do the work, the analysis found they will spend about $2,650 on average.

But that figure varies wildly from region to region mostly due to labor costs. In San Francisco, homeowners can expect to pay more than $55,000 for those combined expenses — and that’s for a median-priced home. If you head over to Cleveland, where the cost of living is much lower, sellers pay an average of just $10,000 for the same expenses.


Home Repair Priorities

Sellers may also have to spend money on repairs. Zillow came up with a recommended list of repairs. Among the maintenance issues you should not ignore are leaky faucets, running toilets, cracked caulking and grout around bathroom fixtures and tile, damaged windows or window screens, and burn-out light bulbs. Damaged walls should also be fixed before they are repainted.

Sellers should also pay attention to the exterior of the home to keep people from simply “driving by”. In addition to mowing the lawn, sellers may want to trim bushes, shrubs, and trees, repair gutters and downspouts, and replace faded mulch in the yard. Broken concrete should be repaired and, if the season is right, a few colorful plants could help boost that “curb appeal”.

As part of the initial house cleaning job, sellers should focus on “decluttering”. If there are personal belongings in the house, get rid of as much as you can and organize the rest. Less “stuff” in the house means prospective buyers will see “more” of the home for sale, and that’s what you want them to notice.

As for the average hidden costs of selling a home in other cities, the analysis shows about $40,000 for Los Angeles and decreasing amounts for Seattle, San Diego, Boston, Washington, Sacramento, Denver, and Portland. Riverside, California, was 10th on the list with $21,000 in hidden costs.

If you hope to buy a property, fix it up and “flip” it for a profit, it’s even more important to understand closing costs – and all costs, really. One cost many new house flippers forget about is income tax from the gain.

This is why buy & hold property has it’s advantages – from a profit and tax perspective. When investment property is held for more than a year, it is usually taxed at a long-term capital gain rate. The investor can also consider a 1031 exchange, and defer any gain to a future date. Or the investor can simply hold onto the property forever, and do a cash-out refinance if cash is needed. There’s currently no tax on that. (This should not be considered as tax advice. Always consult with your CPA or accountant.)

Zillow has a “Sale Proceeds Calculator” to help sellers estimate their potential profit. You can check it out here:


Kathy Fettke

Kathy Fettke

Kathy Fettke is the Co-Founder and Co-CEO of Real Wealth Network. She is passionate about researching and then sharing the most important information about real estate, market cycles and the economy. Author of the #1 best-seller, Retire Rich with Rentals, Kathy is a frequent guest expert on such media as CNN, CNBC, Fox News, NPR and CBS MarketWatch.

Full Bio