When you sell your house, you want to make a profit. Crazy idea, right? But in reality, selling property isn’t just one big windfall. There are many expenses involved that can cut into your profit or even make it difficult to break even. (Although in a seller’s market, it’s much more likely you come out ahead.)
In a typical real estate transaction, sellers should expect to spend 8% to 12% of the home’s sale price on additional costs. With the average home selling for $507,800 in 2022, that’s up to $76,170 in costs and fees.
If you weren’t already, you’re probably now wondering what are the cheapest ways to sell a house. The good news is there are a lot of ways to cut costs and save money in the home selling process. The less good news is it’s not an exact science and you’ll have to make some decisions relative to your unique situation.
In this piece, we discuss some of the best tricks and tips to maximize your profit and so you can find the cheapest way to sell your house.
Most of the time, the biggest fee a seller pays when selling a house is a real estate commission. Historically, that number ranges from 5% to 6% of the sale price. So, for a $500,000 sale, that’s $25,000 to $30,000. You could negotiate a lower percentage, especially if your house is in high demand and expects to sell quickly, but you will probably still pay a hefty commission.
Although it’s less likely to happen in a seller’s market where buyers are making concessions to make their offers more attractive, sellers may also have to pay closing costs. Depending on negotiations, buyers may request that a seller pays HOA fees, property and transfer taxes, or title insurance. They may also ask a seller to pay an escrow fee, a brokerage fee, and a courier fee. In addition, if you enlist the help of an attorney to help you with the paperwork (a smart idea), you will have legal fees due at closing as well.
Finally, you may also owe capital gains tax, although most sellers can qualify to avoid paying capital gains tax on a home sale.
These costs and fees are built into the real estate transactional process. They don’t include the money you may spend on home maintenance, cleaning, staging, and other steps to make your home more attractive to the market.
Despite all the fees, there are still ways to sell a house cheaply. In fact, there are quite a few things you can do to minimize seller fees.
The National Association of Realtors (NAR) claims that realtor-assisted homes sale for 13% more than FSBO homes. However, there’s reason to believe that claim may be exaggerated.
Of course, real estate agents are very helpful but if you’re willing to put in the work, you can avoid that 5-6% commission fee. Listing your home as FSBO means you’re responsible for marketing, showing, and negotiating for your home sale. You can use online platforms like Craigslist, Zillow, Facebook, and a host of other sites to list your home and manage the process yourself. For less than the cost of a real estate agent, you can also get your home on the Multiple Listing Service (MLS) which will showcase it to agents and potential buyers around the country.
Real estate agents earn that commission, however. Pursuing the FSBO route means a lot more effort and you won’t have the expertise to get the best price possible. Plus, unless you’re well-versed in real estate law, you’ll probably still want to get an attorney to help with the paperwork. Managing the sale yourself can ensure more of the profits stay in your pocket but at a personal price.
If you want to lower the commission fee but you don’t have time for a full FSBO, a flat-fee real estate agent is a good compromise. Flat-fee agents are licensed agents who work for a flat-fee that tends to be lower than industry average. You won’t get the full-service treatment of an agent who could handle all the staging, showings, and marketing of your home, but you will get the help of an agent who knows the local market and can get your home on the MLS without an extra expense.
Flat-fee agents make their living by taking on quantity over quality, however, so if you want an agent that is really invested in helping you maximize value, it’s better to go with a full-service agent.
We mentioned earlier that you could negotiate a real estate agent’s commission fee. That’s especially true if you’re willing to move quickly. That means listing your home at a price you know is going to attract a lot of buyers fast.
Yes, that means less profit, but if you do the math, you might find that listing your home for $15,000 less, in exchange for a 3% commission, actually saves you money. Real estate agents don’t get paid until they sell your house, so they’re motivated to sell it fast and move onto the next one. This route could be a win-win for both of you.
Many sellers are sentimental and want to make sure their home goes to somebody who will cherish it as they did. If you’re not sentimental and just want to get a house off your hands — if you inherited a home in disrepair, for instance — selling to an investor is a good option.
Investors are everywhere these days, in the form of individuals, development companies, “We Buy Houses for Cash” companies, and more. Usually, selling to an investor is the fastest way to sell your house and in a way that minimizes the costs associated with selling. The trade-off, though, is that you’ll sell your home for below, and sometimes well-below market value.
Whether you’ve inherited property and want to turn it into cash fast or you can’t afford much-needed maintenance, investors will take a house off your hands with a deal that could close in less than two weeks.
If you really want to sell a house fast and eliminate the fees and costs you’d incur through the traditional process, selling to an investor is your best bet. It’s cheap in the sense that you won’t have to pay many fees associated with a traditional home sale, but you won’t maximize your profit by any means. So if you’re willing to put a little investment into your home — especially if you’re selling in a hot market — you’re much better off going the traditional route.
Now that you know some ways to reduce seller fees, let’s explore some of the ways you can maximize your profit by getting the most value out of your home. Spoiler: They’re all going to require some work.
As dads all over the world will tell you, paying someone to do something you could do yourself is just silly. Yes, it’s easy to hire a professional to repaint a room before you sell, patch holes, fix doorknobs, do a deep clean, and other tasks. But it’s also far more expensive than if you would just do it yourself.
You’re far more capable than you realize and, with YouTube available as a resource, there are so many small household repairs you can handle yourself without hiring anyone or purchasing tools.
The biggest drawback is that repairing things yourself takes time. You may have to learn how to do something in the first place, then fail a couple of times before you get it right. But if you’re not in a rush to sell, you could avoid hundreds to thousands of dollars in handyman expenses.
In some cases, the opposite of doing it yourself is true. Some jobs, like adding energy-saving windows or installing a garage, could actually raise the value of your home. It’s possible to make smart investments in your home that can increase your profit down the line.
Real estate agents use the term “curb appeal” a lot because first impressions are crucial in real estate. Most potential buyers will never step foot inside your home, but many will look at pictures of the exterior or even drive by to see it in person. If the lawn is unmowed, hedges are out of order, and the exterior looks like it’s in disrepair, it’s a big turn-off to potential buyers. Those are things they might have to pay to fix.
Don’t let it come to that. Mowing the lawn, weeding the garden, power washing the clapboards, cleaning the gutters, washing the windows, and repainting shutters are little chores that could go a long way for buyers. Maybe you even plant some flowers.
We all have unique smells that often become ingrained in our living spaces. Usually, it’s no big deal. But when you’re selling your home, you shouldn’t take the chance that you’ve become nose-blind to something pungent in the air.
Deep cleaning your home is something you can pay for or include in the minor work to do before listing. But in addition to scrubbing, you should clean out the fridge and the grids of air conditioners and heaters so they aren’t trapping stale smells. Put some air fresheners around the house or peel an orange or lemon to help get some fresher smells in the air.
Another easy, free thing to do is simply declutter your home and hide your personal effects. Potential buyers want to be able to see themselves in your home. That’s difficult if there’s stuff all over the place making it hard to move around or lots of pictures of a family that isn’t there’s. You can hang the pictures back up in your new home, but when you’re selling your home, you’re trying to sell someone else’s fantasy.
Selling a house isn’t all profit. You’ll incur some fees and have a host of expenses along the journey. But depending on your situation, there are a number of things you can do to minimize fees and maximize your profits. Now that you know the cheapest ways to sell a house, you can go out and make sure you get the best bang for your buck.
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