There’s a lot to consider when you’re planning on selling your home, and a big part of that is how much money you need to plan on spending. Will you need to pay the tax on selling a home? Can you save money?
Here, we’ll explore the costs of selling your home, what you can expect to spend, and where you can potentially save some money in the process.
Real Estate Commissions
One of the costs you can expect when selling a home is paying your realtor their commission. As a seller, one of your expectations is to pay a certain percentage of your home’s selling price to your agent and the buyer’s agent, which can be around 6 percent total (3 percent to each agent).
You can sometimes negotiate fees down, as each agent has their own preferred commission. Some home sellers will try to sell their home without an agent to save on costs, but it could be costly in the end without an expert there to guide you away from any expensive mistakes.
Transfer Taxes and Fees
Depending on where you live, the tax on selling a home and transfer fees will vary.
Here are some possible taxes:
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Property taxes: If your property taxes are close to being due, you could end up owing hundreds or thousands of dollars. However, if you’ve recently paid your taxes or you pay them throughout the year, this number could be quite low and save on the amount of money you need to pay upfront during a home sale.
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HOA Fees: If you live within an HOA fee, you may need to pay the transfer fee. This could potentially be paid by the buyer if you’ve agreed to that in your contract.
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Transfer Tax: In some states, a tax is paid when the title of a home is transferred. However, Utah doesn’t have a transfer tax, so you don’t need to worry if you’re a Utahn!
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Capital Gains Tax: In Utah, the capital gains tax is taxed using the same rate as your income no matter how much you made selling your home. In 2023, that flat rate was 4.95 percent.
Title Insurance
Title insurance is almost always the responsibility of the seller. Title insurance protects both the seller and buyer from any sort of legal problem with the ownership of the home, such as third-party claims, property border disputes, documentation mistakes, etc.
There are two types of title insurance: one that is mandatory and protects your mortgage lender (Lender’s Title Insurance) and one that protects the homebuyer that is paid to the title company (Owner’s Title Insurance).
Some sellers may be tempted to skip out on purchasing owner’s title insurance to save money, but it can end up costing thousands more in the long run. Without purchasing title insurance, many buyers will be wary of entering into a contract they don’t feel secure in, making it more difficult to sell your home. And if any sort of dispute arises, homebuyers run the risk of spending more than the home is worth to settle any legal disputes.
Purchasing title insurance is generally expected of home sellers and is considered risky if you don’t.
Home Inspection Repairs
After a buyer comes under contract with you and a home inspection is done, a seller is responsible for any repairs that may need to be done. It’s smart to have some money budgeted for these last-minute repairs. To potentially save more money and more stress, try to have everything repaired and in working condition before an inspection ever happens so you don’t have to pay for an immediate repair.
Buyer Enticements
If it’s a bit difficult to sell your home at the time, including some extra perks for home buyers can really help sell the home more quickly and for more money. These perks can include paying money towards closing costs, a home warranty, or even staging your home so it looks more appealing. These are all optional costs that can feel like extra money upfront, but you may end up getting a return on your investment with a higher selling price and less time on the market.
An Agent Can Make All the Difference
Knowing when to invest and where to save can be tricky. A good real estate agent who can help guide you through the process is key to a positive experience. Not only are you likely to sell your home for more money, but you will also be a lot less stressed.
Harvest Park Group is Utah’s expert on home buying and selling. Whether you are ready to sell your home or are just looking at a potential move, trust a local expert to guide you. See what your home could sell for today, and get in contact with us to start your home selling process.