It's such a weird time right now and people are wondering if it's a good idea to try and sell their house. Regardless of what's going on in the country and the world, buyers and sellers are still fairly active. So if you're considering selling your Portland or Vancouver area home you might be wondering what that costs. Here's a breakdown of how much it costs to sell a house. Were going to use a flat $500,000 house to show you how this all works out.
Equity and mortgage payoff.
Let's say that you have a house that's worth $500,000 but you still owe $250,000 on the mortgage. If the home sells for $500,000 you'll need to pay off that mortgage first and it may come with a prepayment penalty. If not, that would leave you with $250,000.
Closing costs and fees.
Many of the closing costs are typically the responsibility of the buyer but you may be asked to pay them depending on how motivated you are to sell and the current supply and demand. Buyers may ask sellers to pay part or all of the closing costs and in that case it could be up to $10,000 or more. If you choose not to pay the closing costs you won't have as many fees but you may be asked to pay an escrow fee, brokerage fee, and courier fee, which can range from 1% to 3% of the homes of sale price.
A title policy may also be added in, which ensures that the title is free and clear for you to sell. This also can be negotiated between the buyer and seller.
Capital gains tax.
Oh yes, there is always taxes. If you sell a home for more than you've paid for it, it's considered capital gains and may need to be reported on your federal tax return but, most homeowners are eligible to exclude up to $250,000 of profit or $500,000 for married couples filing jointly if they have not used the tax break on another home in the last two years. If the home was your primary residence for at least two out of the previous five years you can exclude this tax.
Property tax. Your property tax may be due depending on if you are using an escrow account to pay it. Property taxes are usually paid in advance and sellers can pay the prorated share of the property tax up until the closing date.
If you are moving out of the property before selling it, you'll need to continue to pay for utilities until someone else moves in.
Real estate commissions.
This is usually the biggest chunk that sellers pay, which can add up to about 6% of the sale price. If you sell your home for $500,000 that means that you could end up paying $30,000 in commissions but these also can be negotiated. Most commission is split between the buyer's agent and the listing agent, however, agents are really only likely to accept a lower commission when the home sells quickly. If the agent is working twice as hard, it's hard to negotiate a lower commission.
Related: 3 Things Sellers Should Never Do
These fees are optional because it depends on the house and how much you're willing to put into the sale. Home repairs, a pre-sale home inspection, and staging can all be added into the cost of selling a house but is typically not mandatory. Your agent will give you advice and suggestions on the best way to set up your home but you may need to put in a little bit of elbow grease to bring the home up to standard with comparable properties in order to get the most from the sale.
More: Staging: What Not to Do
All in all, on our $500,000 house with $250,000 worth of equity minus commissions and any fees, you're likely to walk away with about $210,000, a great down payment on your next home.
Contact our office at any time for information on selling your home right now, what your home could possibly be worth, and how we can sell in this market.