Expenses Exposed: Hidden Expenses at Closing and How to Prepare for them
Few things make me happier than seeing my clients secure the bag on closing day and walk away with fat stacks of cash. But since I like to put people over profit, it’s more important to me that my sellers know what to expect and don’t have any unpleasant surprises. Here are a few common costs that the seller might need to factor in when calculating their total profit.
Repairs and renovations: If your home needs repairs or renovations before it can be sold, you may need to spend some money to get it in top condition. This can include anything from fixing a leaky roof to replacing outdated appliances, and the costs can add up quickly. A knowledgeable real estate agent can advise you on what is worth fixing and help you find a handyman/contractor you can trust.
Homeowner association fees and back taxes: If a seller has fallen behind on homeowner association fees or property taxes, they may be required to pay these back taxes or fees at the time of sale. This can come as a surprise to some sellers who may not have realized they owed these expenses.
Closing costs: When you sell your home, you will be responsible for paying typical closing costs. These can include fees for title search, title insurance, and attorney fees - prepare for a range from 2% to 5% of the sale price of your home.
Capital gains tax: If you sell your home for more than you paid for it (which I’ll help you do), you may be subject to capital gains tax. This amount can be significant, and it's important to factor it into your calculations when determining your net proceeds from the sale. One way to avoid the tax is to have lived in the home for 2 out of the last 5 years.
Moving expenses: Finally, you'll need to factor in the cost of moving to your new home. This can include hiring movers, renting a moving truck, even purchasing packing supplies like tape and boxes.
Selling a home should be a money maker for you… but it can be a complex and expensive process, and it's important to be prepared for unexpected costs that may arise along the way. Hopefully this list helps you calculate what your net profit will be so you can make big moves in the future.
Got questions? Reach out to me any time. dom@waterfrontbrevard.com or DQuaglia@tyleryork.com