Homeowners

The True Cost of Selling a Home: What to Expect

When many folks list their home for sale, they're so focused on how much they will make that they may overlook how much selling a home costs—and how those expenses can add up fast.

The typical homeowner spent nearly $55,000 on home-selling expenses in 2024, which surprised 64% of sellers, according to a survey by Clever Real Estate. The company surveyed more than 1,000 Americans who sold a home between 2022 and 2024.

These expenses often include real estate agent commissions, which typically run about 2.5% to 6% of the sale price, depending on whether the seller is compensating the buyer’s agent. Closing costs can add another 1% to 3% to the bill.

Many people selling their homes also spend money on repairs, updates, and staging to make their houses look better.

"When selling a home, sellers often overlook several financial costs that can significantly impact their bottom line," said Venus Sherril, a loan officer for New American Funding based in Arlington, Texas.

While selling a home can be more expensive than homeowners think, planning ahead can help avoid surprises.

What you need to know about real estate agent commissions

Paying your real estate agent can be one of the largest costs of selling a home. 

However, working with an agent may wind up being a smart financial decision. A good agent may help homeowners present their properties in the best possible light to help them get top dollar. They can also help them to negotiate things like home repairs, along with appraisal and other contingencies.

Agents can also help sellers to evaluate multiple offers to ensure sellers are accepting the strongest one.  

Historically, sellers have generally been responsible for paying about 5% to 6% of the final home sale price as commission to real estate agents, with the total amount split between the seller’s and the buyer’s agents.

A recent settlement with the National Association of Realtors (NAR) changed how these commissions work. As of August 2024, sellers may not be required to pay the buyer's agent commission in certain instances.

However, in many real estate markets, sellers may still need to be pay the buyer’s commission. A prudent course of action is to talk to your real estate agent to make sure you agree on how to make the sales process as effective as possible.

Home sellers must still pay closing costs

Sellers may not realize what goes into closing costs and how much they will be expected to shell out. They include things like title insurance, taxes, and fees for things like escrow, recording and filing charges, and attorney bills.

“Closing costs are a key part of selling a home and can really add up," said Sherril.

In 2024, sellers spend an average of about $8,000 on closing costs, according to Clever. On top of these fees, sellers might also have to pay any unpaid property taxes, homeowner association (HOA) fees, or transfer taxes.

All these expenses reduce the profit you walk away with after the sale.

Sellers often make home repairs and improvements

Getting your home ready for sale often requires making some updates or repairs. Buyers tend to look for move-in-ready homes with curb appeal, and sellers may need to invest in a fresh coat of paint, landscape the front yard, and fix anything broken to attract offers. They may also want to replace outdated fixtures.

Sellers in 2024 spent about $10,000 on home repairs and improvements to enhance their home's appeal, according to Clever.

Home staging can also play a big role in how quickly your home sells and at what price. This is when sellers pay to have their home redecorated, complete with rented furniture, to make the property more attractive to potential buyers. 

Sellers spent an average of $600 on staging services, according to a NAR survey of nearly 2,000 real estate agents in January 2023.

But it may really pay off. About 44% of agents said it can increase the value of a home, according to the survey.

Sellers often have moving expenses

Once your home is sold, you'll need to move out. That may not be cheap.

Whether you hire professional movers or rent a truck to do it yourself, there are expenses to consider.

Moving costs can range from a few hundred to thousands of dollars, depending on how far you're going, how much stuff you have, and what type of moving service you book. The median moving cost is about $3,250, according to Clever.

Home sellers typically pay property and capital gains taxes

When you sell a home, you might need to pay prorated property taxes up to the sale date.

Additionally, if you profit from selling your home, you might owe capital gains taxes. However, a tax exclusion for primary residences allows you to exclude up to $250,000 of profit if you're single or up to $500,000 if you're married and filing jointly. This can significantly reduce your tax burden, but certain rules apply.

If you sell the property after living in it for less than two years, you may not qualify for the full exclusion.

If sellers don't meet the two-year residency rule, they need to know that capital gains taxes can greatly affect their final profit. This could lead to a 15% to 20% tax rate on the gains.

Planning your sale carefully to meet these requirements can save you thousands in taxes.

"By accounting for these expenses, sellers can avoid unexpected financial surprises and better prepare for the overall cost of selling their home," said Sherril.

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