Hidden Costs of Selling a Home Come Under Scrutiny

Hidden Costs of Selling a Home Come Under Scrutiny

More than half of sellers with homes currently on the market are selling for the first time, and the costs associated with the process may come as an unwelcome surprise. Zillow and Thumbtack identified several common – but often overlooked – expenses to inform sellers as they prepare to list their homes this spring.

On average, the selling cost for a home in the United States is $20,851, according to Zillow® and Thumbtack’s 2019 Hidden Costs of Selling analysis. This includes closing costs, but also the improvements and other projects made when people are preparing their homes for sale.

The majority (79 percent) of sellers complete at least one home improvement project before putting the home on the market, which tends to pay off. Sellers who make improvements to their homes are more likely to sell for more than their asking price than those who don’t – 22 percent versus 16 percent, according to research.

Sellers who hire professional help for common home prep projects tend to spend, based on a national average, $6,570 on improvements like interior and exterior painting, staging, and carpet cleaning, as well as local moving costs to their new home. But with the cost of labor varying by market, sellers in different areas could see significantly different costs. Sellers in Sacramento can spend about $7,800 preparing their home for sale, compared with Phoenix sellers, who could spend about $4,000 for the same projects.

Closing costs are another big expense for home sellers, including agent commissions and transfer or sales taxes. Nationally, these can add up to $14,281, on average, but because they are based on the home’s sale price, sellers in the nation’s priciest markets pay much more. In the San Jose metro, sellers pay $76,015 on average in closing costs, the highest of metros analyzed. By comparison, sellers in Cleveland spend the least–$9,046.

Preparing a home for sale is just one of the pain points for sellers. The two biggest challenges for sellers were timing the sale with the purchase of a new home, and selling it within the desired time frame, according to Zillow research. And with some of the hottest markets cooling off, buyers are able to be more selective as they look for a new home, meaning sellers may have to do more to get their homes sale ready.

“Selling is often a complicated process that can sometimes require extensive prep work in order to put your best foot forward for a successful sale,” said Skylar Olsen, Zillow’s director of economic research. “It also comes with huge transaction costs that aren’t necessarily top of mind to someone who hasn’t sold a home in a while or never has had the pleasure. Selling was hard even in the sellers’ market of recent years, and it’s going to get harder as markets soften.”

“While the costs of these touch-up projects can add up, particularly in high cost of living metros, sellers should remember that by taking care of these projects, they can get a really strong return on their investment and may be more likely to sell their home for the highest possible price,” said Lucas Puente, Thumbtack economist. “As a first step, homeowners considering selling their home in the next 12 months should start doing research and budgeting appropriately to give themselves ample prep time.”

Metro

Median
Home Value,
February
2019

Estimated
Closing Costs
(commissions
and state
transfer tax)

Basic Home Prep
Costs (carpet
cleaning,
interior/exterior
painting, home
cleaning, lawn care,
staging and local
moving)

Total Hidden
Costs of
Selling

United States

$225,600

$14,281

$6,570

$20,851

New York, NY

$438,900

$28,090

$5,420

$33,510

Los Angeles-Long Beach-Anaheim, CA

$652,700

$39,880

$6,180

$46,060

Chicago, IL

$224,800

$13,825

$4,800

$18,625

Dallas-Fort Worth, TX

$243,000

$14,580

$4,770

$19,350

Philadelphia, PA

$232,800

$16,296

$5,200

$21,496

Houston, TX

$205,700

$12,342

$5,135

$17,477

Washington, DC

$405,900

$30,240

$4,400

$34,640

Miami-Fort Lauderdale, FL

$283,900

$19,021

$5,220

$24,241

Atlanta, GA

$217,800

$13,286

$4,770

$18,056

Boston, MA

$466,000

$30,085

$5,495

$35,580

San Francisco, CA

$958,000

$58,534

$7,620

$66,154

Detroit, MI

$160,400

$11,003

$5,295

$16,298

Riverside, CA

$367,100

$22,430

$6,245

$28,675

Phoenix, AZ

$265,400

$15,924

$4,040

$19,964

Seattle, WA

$491,500

$38,239

$7,570

$45,809

Minneapolis-St Paul, MN

$268,400

$16,990

$5,020

$22,010

San Diego, CA

$591,800

$36,159

$6,270

$42,429

St. Louis, MO

$166,900

$10,014

$3,690

$13,704

Tampa, FL

$213,300

$14,291

$5,220

$19,511

Baltimore, MD

$267,900

$17,414

$4,350

$21,764

Denver, CO

$406,700

$24,443

$5,630

$30,073

Pittsburgh, PA

$144,200

$10,094

$4,715

$14,809

Portland, OR

$397,000

$23,820

$7,520

$31,340

Charlotte, NC

$206,500

$12,803

$4,275

$17,078

Sacramento, CA

$409,000

$24,990

$7,840

$32,830

San Antonio, TX

$193,000

$11,580

$5,075

$16,655

Orlando, FL

$237,200

$15,892

$5,205

$21,097

Cincinnati, OH

$168,800

$10,466

$4,955

$15,421

Cleveland, OH

$145,900

$9,046

$5,195

$14,241

Kansas City, MO

$191,800

$11,508

$6,430

$17,938

Las Vegas, NV

$279,000

$18,163

$5,715

$23,878

Indianapolis, IN

$164,300

$9,858

$4,965

$14,823

Columbus, OH

$189,800

$11,768

$5,045

$16,813

San Jose, CA

$1,244,100

$76,015

$7,755

$83,770

Austin, TX

$308,700

$18,522

$4,965

$23,487

Zillow and Thumbtack’s 2019 Hidden Costs of Selling report factored in closing costs (transfer taxes and agent commissions) and several basic home prep costs. Zillow computed transfer taxes by using the tax rate for the primary state within each metro area (in cases where metro areas cross one or more state lines), which were then applied to the median home value for that area. Zillow also assumed 6 percent for real estate agent commissions and applied it to the median home value for each metro area.

For home prep costs, Thumbtack looked at tens of thousands of quotes from small business professionals around the country and determined the average cost for each expense within the selected metros. For the purposes of this analysis, carpet cleaning, interior and exterior painting, full-service lawn care, home staging, house cleaning and local moving costs were identified as seven of the most popular seller prep projects completed by Thumbtack during the selling a home sale process.

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After earning her bachelor’s degree in journalism at the University of Central Florida, Tracey set out in the real world at Florida Realtors in 1994 as a communication assistant, working her way up to editor in chief of Florida Realtor magazine. In 2004, she left the association to start her freelance writing and editing business. One of her first clients was REAL Trends, and she started working for the organization in 2005. In 2014, Tracey was promoted to editor in chief of publications for REAL Trends. She handles the writing and editing of all REAL Trends publications and marketing materials, including LORE Magazine, the REAL Trends newsletter and the blog. She is also the primary podcast interviewer where she conducts interviews with top real estate industry leaders and affiliated industry leaders. Tracey is married with two children.

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