What Are The Costs Of Selling A Home?

Kyle Hiscock
Published on May 17, 2016

What Are The Costs Of Selling A Home?

How Much Does It Cost To Sell A Home?

What Are The Costs Of Selling A Home

What Are The Costs Of Selling A Home

Many homeowners who are thinking about selling their home don’t realize there are specific costs of selling a home.  Due to the fact that many homeowners don’t realize this, asking about the costs of selling a home is one of the most frequently asked questions about selling a home.

It’s very important that if you’re thinking about selling your home, you understand what the costs of selling a home are and also why you’re paying them.  One of the worse feelings for a home seller is to find out they have to fork up a couple thousand dollars for closing expenses that they had no idea existed.

As one of the top Realtors in Rochester NY, I find it extremely important to explain to a seller upfront what the potential costs of selling a home could be.  It makes my job much easier when I don’t have to backpedal and explain to a seller why they are paying for specific things while we are reviewing a purchase contract.

Below you will find out what the costs of selling a home are and why they are potentially incurred.  Keep in mind that some of the costs of selling a home that are discussed below may not apply to all home sellers.  By understanding the costs of selling a home that are listed below, you greatly reduce the chances that you will be shocked when reviewing a closing statement.

Brokerage Fees / Real Estate Commissions

First and foremost, brokerage fees, which are frequently referred to as real estate commissions, are negotiable.  In the majority of real estate transactions, a seller is responsible for paying the costs of real estate commissions.  This is sometimes a difficult pill to swallow for sellers, especially first time home sellers, but it’s important to keep in mind that when a seller bought the home they are trying to sell, it’s likely the previous owners covered the costs of real estate commissions.

Since real estate commissions are negotiable, it’s very important that you understand before signing a listing agreement that you know what the percentage or dollar amount will be for the commissions.  One of the most important questions to ask real estate agents when selling a home relates to the brokerage fees they charge.  Once an amount is agreed upon, it’s critical to get it in writing, which is usually done by signing an exclusive right to sell contract (in New York).

Since real estate commissions can be a substantial cost, it’s important you know exactly what services you’re receiving.  A 6% brokerage fee on a $500,000 sale would be $30,000 in commissions, so knowing exactly what real estate marketing strategies the agent is going to use is critical.  It isn’t always the best decision for a seller to hire the agent who offers the lowest percentage or amount of commission as this agent may not provide a level of service that is required to get a home sold in the shortest amount of time and for top dollar.

Seller Concessions

One of the costs of selling a home that some sellers may encounter are known as seller concessions.  Seller concessions in real estate allow a seller to contribute money towards a buyers closing expenses and down payment.

Some sellers find it very difficult to contribute money towards a buyers closing expenses and down payment, however, without seller concessions it is possible a buyer may not be able to afford to buy a home and ultimately, the seller isn’t able to sell their home.  There are many different types of mortgages that a buyer can choose from and depending on the type of mortgage, a buyer can receive different percentages of seller concessions.

For example, if a buyer is going to be getting an FHA loan, they are able to receive a seller concession up to 6% of the purchase price of the home.

Title Search Cost

A Title Search Is A Cost Of Selling A Home

A Title Search Is A Cost Of Selling A Home

Anytime a piece of real estate is transferred, a title search will be completed.  The cost to complete this search is customarily one that is covered by a home seller.  The cost of a title search in the Greater Rochester NY area is between $400 – $600, depending on a variety of circumstances.

The purpose of a title search is to ensure the seller has the right to transfer ownership of the property and also discover whether there are any claims, errors, assessments, debts, or other restrictions to the property.

Recently while selling a home in Webster, NY, a review of the title discovered that there was an outstanding mortgage that was never satisfied from the owner previous to the seller.  This had to be rectified before the buyers lender would accept the title and release the funds to the buyer to be able to purchase the home.

Instrument Survey Cost

The majority of mortgage companies will require an instrument survey to be completed prior to approving the funds to purchase a home.  The instrument survey is one of the costs of selling a home that the majority of sellers will cover.

The purpose of an instrument survey is to show the various improvements on a piece of land such as a garage or the home itself.  Additionally, an instrument survey shows any variances on a property as well as any boundary line encroachments.

The cost of an instrument survey depends on several factors, including the amount of acreage and the topography of the land.  The general cost of an instrument survey in the Greater Rochester NY area is ranges between $400 – $600.

Home Warranty

One of the optional costs of selling a home are home warranties.  When selling a home, a seller has the option to offer prospective buyers a home warranty.  It’s important that when selling a home you determine whether offering a home warranty is worth it or not.

Many home warranties will provide coverage for the seller while the home is listed for sale on many of the major components of a home such as the HVAC systems, electrical systems, and plumbing systems.  The peace of mind that this offers a seller can be worth offering the home warranty alone.  A home warranty also can help put a buyer at ease since they are receiving coverage for a specified amount of time after closing on the homes major components.

Depending on the warranty company and the size of a home, the cost of a home warranty will vary.  The cost of a home warranty for a single family home that is under 2,500 square feet is around $500.  Again, offering a home warranty is one of the optional costs of selling a home, so it’s important to weigh the benefits and drawbacks of offering it.

Transfer Taxes

Transfer & Capital Gain Taxes Are Home Selling Expenses

Transfer & Capital Gain Taxes Are Home Selling Expenses

When selling a home, there are a variety of taxes that are involved and paid.  One of the costs of selling a home are transfer taxes.  Transfer taxes are paid to the local jurisdiction in which the property is being transferred in exchange for making the transaction legal and official.

When selling a home, you need to know what the tax percentage or amount is for transfer taxes.  In the Rochester NY real estate market the transfer tax is generally $4.00 per thousand.  For example, if a home is sold for $200,000, the seller would pay $800.00 in NYS transfer taxes.  To find out what the transfer tax percentage or amount is, it’s recommended that you visit your States website for information on real estate transfer tax.

Capital Gain Taxes

Depending on the amount of profit a seller makes on the sale of their home will determine whether or not they will be required to pay capital gain taxes.  Capital gain taxes require a seller to pay taxes if they sell their home for a substantial amount more than they purchased their home for, but there are exclusions.

If you’re selling your home and file your taxes as a single, capital gain taxes are not required on any amount under $250,000.  For married couples, capital gain taxes are not required for any amount under $500,000.  When figuring out the gains from a sale, it’s possible for a seller to use expenses such as home improvement projects as deductions.

For example, if a seller bought their home for $150,000 and sells their home for $450,000 but put $100,000 towards improvement projects, their gain would be $200,000 which means they would be exempt from paying capital gain taxes.

If required to pay capital gain taxes, the amount will depend on your tax bracket.  If you are unsure whether you will be required to pay capital gain taxes or not, you should consult with your accountant.

Existing Mortgages and/or Home Equity Loans

Paying off existing mortgages and/or equity loans on a home are often the biggest cost of selling a home.  If you’re selling a home and do not have a mortgage or home equity loans, this cost can be disregarded.

When selling a home, you need to realize that the balance of an existing mortgage or equity loan may not be the payoff amount.  One of the most important things to do before selling a home is to find out what the payoff balances are on any mortgages or loans.

The sale price and the amount of the other costs of selling a home need to be less than the payoff amounts, otherwise, you may need to come up with money at closing or potentially may need to consider a short sale.

Cost Of Repairs From Various Inspections

Another potential cost of selling a home are repairs that are negotiated as a result of various inspections of a home.  There are tons of reasons why home buyers have home inspections and a variety of other inspections.

It is feasible that there will be no additional costs from various inspections, however, it’s important to be aware of the potential additional costs of selling a home that can arise from inspections being completed on your home.

Final Thoughts

It’s pretty well known that there are costs associated with buying a home, but the same cannot be said about the costs of selling a home.  As you can see from the above information, there are many costs of selling a home that you need to be aware of.

A top real estate agent will provide you with what is called a sellers net sheet so that you can see what the potential costs are to selling your home.  Keep in mind that some of the costs cannot be predicted, such as repairs from various inspections.

Other Top Home Selling Resources


Are you thinking about selling your Rochester, NY home?  The above information about the costs of selling a home in Rochester NY can help eliminate surprises at the last minute.  It’s important when interviewing top Rochester NY real estate agents you ask about the costs of selling a home.  If you haven’t hired a top agent yet, contact me and I’d love to share my expertise and knowledge about the local real estate market.

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About Rochester’s Real Estate Blog: The above article “What Are The Costs Of Selling A Home?” is hosted by the Keith Hiscock Sold Team (Keith & Kyle Hiscock), the owners of Rochester’s Real Estate Blog. With over 30 years combined experience, if you’re thinking of selling or buying, we’d love to share our knowledge and expertise.

We service the following Greater Rochester NY areas: Irondequoit, Webster, Penfield, Pittsford, Fairport, Brighton, Greece, Gates, Hilton, Brockport, Mendon, Henrietta, Perinton, Churchville, Scottsville, East Rochester, Rush, Honeoye Falls, Chili, and Victor NY.

© 2016, Kyle Hiscock. All rights reserved.

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