How Much Does It Cost to Sell a Home in Brooklyn?
Jan 30, 2024 brooklyn,brooklyn real estate,brooklyn realty,brooklyn sellers,Brooklyn Sellers Agent,moving,realty collective,selling in brooklyn,selling your home
Selling a house is time consuming and expensive — often much more than sellers might expect. When you’re thinking about selling, it’s easy to get excited looking at your Zestimate and seeing how much your home value has increased over the years, but it’s important to be prepared for the hidden, and sometimes overlooked, costs of selling a home.
On average, homeowners spend seven months planning and preparing to sell their home, and three additional months with their home listed, pending and closing. Here are the expenses you can expect during that time.
The overall transaction costs of selling a house include standard closing costs as well as potential charges associated with preparing the home for sale, relocating your belongings (and sometimes yourself), and offering concessions to the buyer.
To clarify, closing costs include up to 6 percent in commissions (to your agent and the buyer’s agent), and an additional 2-4 percent in transfer taxes and property taxes, attorney fees, and real estate fees like title insurance, HOA transfers, and escrow fees.
Breakdown of home selling costs:
- Home preparations
- Vacating the home
- Seller concessions
- Closing costs for sellers
- Real estate fees: Loan payoff, taxes and penalties
Home preparations
While not the typical closing costs, these are some of the contributing costs to sell a house:
- Cleaning: Before your first open house or showing, consider hiring a house cleaner to do a deep clean. You’ll also want to have the carpets professionally cleaned and the windows washed.
- Staging: In recent research, 48 percent of recent buyers ranked having a home staged as somewhat, very or extremely important. Home staging can take many forms, but at a minimum, you should declutter, arrange furniture to make the most of the space, and remove personal belongings. Little touches like new bath towels, a fresh doormat, flowers, and cookies can go a long way too.
- Landscaping: Your curb appeal is your home’s first impression, so you’ll want to make your exterior look its best. Add flowering plants, create a walkway if you don’t already have one, rake any leaves, mow the lawn, light the walkway, and — in winter — shovel snow.
- Home improvements: There are two main types of home improvements you can do before listing: updates to repair or replace old systems (roof, furnace, windows, etc.), and upgrades that add features buyers love, with a goal of garnering a higher sale price. Ask your agent for their recommendation on what buyers in your specific area are looking for. Seventy-nine percent of sellers undertake home improvements before selling.
- Professional photos: Sixty-eight percent of home buyers say that viewing professional pictures of a property is somewhat to extremely important. The investment is small, but the payoff can be huge. Standard professional photos cost $150-$200, depending on the market. If you’re using a full-service listing agent, they may cover the cost for you.
- Marketing costs: There are costs associated with listing your home on the local MLS, but it is usually covered by your real estate agent if you’re using one. If you’re selling on your own — called for sale by owner (FSBO) — you can list your house for free on some real estate sites. If you’re selling on your own, you’ll also want to set aside some money to print flyers, signs and open house materials.
- Pre-inspection: A pre-inspection is optional, but if you choose to do one before listing, you’ll know ahead of time about any major issues that need to be addressed, which can save a lot of negotiating with potential buyers down the road. According to Zillow research, 15 percent of home deals that fell through failed because the buyer backed out after the inspection report. By paying $250- $700 for an inspection (depending on the size of your home), you’ll have the information you need to choose the right list price and negotiate strategically.
Vacating the home
Another type of expense you’ll need to budget for is moving — the costs related to actually vacating your home.
- Temporary housing: If you’re selling one home and buying another, it’s almost impossible to time the transactions perfectly so there are no additional housing costs. Regardless of where you’re moving next, most sellers typically have an overlap of about a month and a half when they’re still paying their existing mortgage, plus alternative housing costs.
- Utilities: Most sellers leave their utilities on while their house is on the market, for showings and open houses. But be sure to shut off utilities as of the date you vacate so you can avoid unnecessary costs. Your final utility bills should be prorated as of the date of sale.
- Moving costs: Moving expenses can vary dramatically based on the size of your home, how many belongings you have, and how far you’re moving. But whether you’re doing a DIY move, using professionals from start to finish, or something in between, there are always expenses associated with moving, and they often have to be paid before closing, so you’ll need cash available.
- Homeowners insurance for vacant property: Did you know that your existing homeowners insurance policy may not cover your property when it’s vacant? If your home is going to be vacant for any period of time, it’s important to talk to your agent about adding a rider to cover that period.
Common home seller concessions
It’s rare that you receive the perfect offer and can close without making any concessions to the buyer. In fact, according to the Zillow Consumer Housing Trends Report, 83 percent of sellers make some kind of trade-off with the buyer to facilitate the sale of their home. Here are a few common concessions:
Post-inspection repairs: Rarely does an inspection report come back perfect, so it’s common for buyers to request repairs from sellers. As a result of an inspection report, sellers often either lower the sale price so the buyers can make the repairs themselves, or have the repairs completed as a condition of the deal.
Home warranty for buyer: As a way to sweeten the deal for potential buyers, sellers sometimes cover the cost of a home warranty. Not only can it make your home stand out from others on the market, but it can increase a buyer’s confidence in your property. A one-year home warranty can cost $300-$500, depending on coverage.
Credits toward closing costs: Another concession buyers often request is that the seller cover all or part of the buyer’s closing costs, which effectively minimizes the amount of cash a buyer needs to bring to the closing. For the seller, this cost comes out of the profit you’ll make on the home on closing.
Typical closing costs for sellers
Average closing costs for sellers range from 8-10 percent of the home’s sale price, including both agent commission (about 6 percent of the sale price) and seller fees (about 2-4 percent). With the median home price in the U.S. at $217,000, that puts the closing costs range at $17,000-$22,000. Of course, these costs vary depending on the tax rate where you live and the value of your home.
Seller closing costs include:
- Agent commission: The majority of your closing costs come from paying commission to real estate agents. It’s typical that the seller pays 3 percent to their own agent, and in many cases to remain competitive, also pays 3 percent to the buyer’s agent, which is entirely negotiable.
- Transfer tax: Also known as a government transfer tax or title fee, this amount varies widely due to varying tax rates by state and the sale price of the home.
- Title insurance: Sellers are also typically required to pay for a title insurance policy for buyers, which protects their interest in the home if there are issues with a disputed title or outstanding liens. Costs can be in the $1,000-$4,000 range, and come out of your net profits on the deal on closing.
- Escrow fees: Buyers and sellers typically split the cost of escrow services (the third-party company that handles the disbursement of funds in the sale), which can run $500-$2,000, and can also include extra line items for office expenses, transfer fees, and notary services.
- Prorated property taxes: You’re responsible for the property taxes on your home up until the day of closing, so you’ll see a prorated charge on your settlement statement.
- HOA fees: Similar to property taxes, if you live in a community with a homeowner’s association, you’ll also be required to pay your dues, prorated up to the close date. There also may be a fee for the transfer of ownership.
- Attorney fees: If you use the services of an attorney in your transaction (which is required in some states), you’ll have to pay them on closing, too.
Real estate fees: Loan payoff, taxes, and penalties
Once the closing costs are settled, it’s not all profit. There are still a few more costs of selling a house that you need to be aware of:
- Outstanding mortgage balance: If you’re still paying a mortgage on the home, part of the closing process will include paying off the balance of your mortgage, prorated to the date of sale. You’ll want to check with your mortgage company to see if there is a prepayment penalty as well.
- Capital gains tax: Here’s a cost to sell a house that’s often overlooked — until tax time. If you’ve lived in the home for at least two of the last five years, you’ll get a tax break on the profit you make on the sale, up to $250,000 if you’re single or married filing separately, or $500,000 if you’re married, filing jointly. If you think you’re going to be subject to capital gains taxes, either because you’ve profited more than the set amount, or because you’ve lived in the home for less than two years, ask your tax professional about subtracting the costs of preparing the home for sale from your profits.
Home sale transaction math
Let’s use a $200,000 home as an example. Say you purchased the home five years ago, putting 10 percent down (that’s $20,000). Now you’re able to sell the house for $220,000, thanks to appreciation and home improvements you’ve made. Here’s an estimate of what your costs might be:
| Original purchase price | $200,000 |
| 10% down payment | $20,000 |
| Loan amount | $180,000 |
| Current mortgage balance | $165,000 |
Most likely transaction costs
|
Home preparations |
$5,000 includes common updates like staging, carpet cleaning, and landscaping) |
|
Commissions |
$13,200 (assuming 6%, 3% to your agent & 3% to a buyer’s agent – negotiable) |
|
Transfer tax |
Varies widely by location |
|
Prorated property tax |
Varies widely by location |
|
Utilities |
$258 (1.5 months of utilities, based on average monthly utilities from the US Department of Energy) |
|
Escrow |
$1,000 (seller’s half) |
|
Title insurance |
$1,000-$4,000 |
|
Sum of most likely costs |
$20,458-$23,458 |
Possible transaction costs
|
Buyer concessions offered during negotiation |
$2,200 (1% of the sale price, on average) |
|
Optional pre-inspection |
$250-700 (depending on the size of the home) |
|
HOA fees |
$200-$400 (estimated based on paying 1.5 months of dues, plus transfer fee) |
|
Attorney fees |
$500-$1,500 |
|
Temporary housing |
$2,000 (1.5 months at the U.S. average rent of $1,442 a month) |
|
Sum of possible costs |
$5,150-$6,800 |
Total costs of selling a home
| Sale price | $220,000 |
| Current mortgage balance | -$165,000 |
| Equity (sale price minus loan balance) | = $55,000 |
| Most likely transaction costs | -$20,458-$23,458 |
| Possible transaction costs | -$5,150-$6,800 |
| Net proceeds | $24,742-$29,392 |
| Transaction Costs | 44-53% of equity spent on the transaction |
It’s important to remember that each scenario is unique. So while these hypothetical numbers can give you an idea of what the cost of selling a home is, each transaction has it’s own nuances and will vary dependent on a number of variables. Get in touch if you want a breakdown more specific to your circumstances, and let’s talk it through together!
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If you’re interested in learning more about the selling process, download our free Seller’s Guide. We share a ton of valuable resources to demystify the selling process and help you along this emotional journey.