How much does it cost to sell your Outer Banks home? Each home is different and has a different maintenance history. This can impact how much you will need to spend in Pre-sale fixes. Each deal is different and may impact how much, if any, to offer in buyer credits. We have broken out the categories of costs and provided a typical amount and areas where you can save money.
One of the largest single expenses in selling your home is the Realtors commission. In the Outer Banks, Realtor commission are typically 6% of the sale price. The seller pays both the buyers and sellers agency commissions. This is not an insignificant amount of change. The average OBX home is around $400,000; the 6% commission is $24,000.
Eillu Real Estate has lowered our listing commission to 1.5%! This will save you $6k on the sale of the $400k home. But, this is only half of the equation. In order to attract buyers, you will still need to offer a commission to the buyer’s agency of 2 to 3%.
If you are considering FSBO (For Sale By Owner), make sure you have the time and skills to be able to take on the job. Eillu Real Estate full service package is a bargain and statistics show homes represented by an owner sell for 28% less than homes with Realtors. The lower selling price cancels out any savings realized from not paying the Realtors commission.
Where Does the Commission Go?
Traditionally, the customary 6% commission is split 4 ways. As a seller, you contract with ABC Real Estate to sell your home. When XYZ Real Estate finds a buyer then each Company gets a share of the 6% commission. After this, the listing agent and the buyers agent also get a share of the commission. The actual amount of the split may vary depending on the listing agreement.
Real Estate Agents are Contractors
Most real estate agents get commissions not salary. This means they are considered Contractors or Self-employed. All the costs for marketing the sellers home, hiring a professional photographer or drone videographer and the cost of putting the listing on the MLS comes out of the listing agents or brokerage pocket. Agents will have a lot of expenses to pay before ever getting compensated with the earned commissions.
Keep in mind, if the house does not sell, the agent and brokerage do not get paid for their time or for the expenses they paid out of pocket for the marketing.
Sellers Closing Costs
Buyers tend to have higher closing costs. Sellers should still plan on an additional 2% to cover the closing costs. This covers such things as transfer taxes, escrow expenses and notary fees. You will also have to pay the pro-rated share of the property taxes, HOA dues, water and sewage bills. Of course, you also have to payoff the remainder of your mortgage.
Seller Credits to Buyer
When it is a buyers’ market, buyers will look to sellers to cover some of their closing costs to sweeten the deal. While this is not required, it can be beneficial and the savvy seller will want to consider the big picture. Sellers can be asked to cover the cost of the appraisal, recording and transfer fees, title insurance or a portion of the total closing costs.
It is your choice as to how much to spend in preparing your home for sale. Many homes can benefit from some selected “freshening” and the price the home sells for more than justifies the added expense. A fresh coat of paint, especially if you apply it yourself, is an inexpensive way to brighten up your space.
A thorough cleaning (performed by a pro or yourself if you don’t mind getting your hands dirty), is key to making a good first impression. Cleaning the windows inside and out, the gutters, and tiding the landscaping and tree trimming should also be tackled.
Repairing any broken items before putting the home on the market is better than to wait for the buyers’ inspection to reveal the items and re-negotiate.
Most buyers today will include an acceptable inspection as a condition for their offer. If an inspection reveals an issue with the property, then the seller can pay the cost to correct it, refuse to correct or negotiate a compromise.
Offering a home warranty to the buyers of your home may be just the thing to cinch the deal. The cost of a warranty is about $500. While this is not required, it may ease the mind of the buyer who is going to be strapped for the next year and does not want any surprise expenses.
Capital Gains Taxes
If the profit you make on the sale of your house is more than $250,000 (or $500k for married couples filing jointly), then Uncle Sam is going to want his cut too. The amount you will owe depends on your tax situation. There are also strategies to legally defer tax, like a 1031 exchange when the property was used as an investment.
The bottom line is that a seller may have to spend up to 10% of the sale price of the home to get it sold. This may surprise a lot of people. Knowing how much you are likely to net before putting your home on the market is important to properly plan your next steps.
Choosing the best real estate agency to represent the sale of your home should not be based only on price. The services you receive in exchange for that price is important to get the most value for your dollar. Most important though, is to have trust. Confidence that your most valuable asset is in the best hands possible. At Eillu, our actions speak louder than words. List with us and find: honest communication, transparency, and fairness to all parties.