Selling a Home Costs Money Too

News

Several entities that wonder about such things have
commented recently on the apparent reluctance of homeowners to sell their
homes.  Historically Americans have
tended to buy their first home at a certain age, and move up into a newer,
larger, better located, or more amenity laden home a few years later, and then
perhaps move again to downsize or relocate to a more suitable place for
retirement.  Now, not only are they
buying that first home later than their predecessors, but once settled in, they
tend to stay there
.  This has had
ramifications for potential buyers as inventories of existing homes for sale
are at record lows.

This lack of mobility was initially blamed on the lack of home equity following
the housing crisis.  This locked homebuyers
into place, either because the sale price failed to cover their mortgage
balance or might not provide enough cash for a down payment on the next home.
Then the possible reasons were variously the tight purchase mortgage
requirements that made it scary to sell a home they already owned, unwillingness
to lose a current super-low interest rate, or the circular argument, too few
available homes to buy.  Now Thumbtack Journal adds another reason;
the cost to sell a home. The Journal says,
Sleepelling a home isn’t just about making money, it’s about spending some too.”

The publication’s analysis, based on data from Zillow, puts a price of
$15,190 on the extra or hidden costs involved in selling a home, and speculates
that “a big part” of the record $327 billion homeowners will spend on renovations
and repairs this year is in getting that home ready for sale. Since 63 percent
of today’s sellers have never sold before, some of these costs could come as a
big surprise.

Eight of 10 sellers make improvements on their home before putting it on the
market and those who hire professionals to do the work pay an average of over $2,650
for staging, painting, landscaping, and cleaning – some of the most popular
pre-listing projects. The costs can vary by region but a rough range would be
an average of $4,000 in Los Angeles verses $1,500 in Columbus, Ohio.

Outdistancing the fix-up costs, which are at least optional, are marketing
and closing costs
.  Real estate
commissions and the sales or transfer taxes that are levied in most states,
cost an average of $12,532 when selling a median priced home.  Since both commissions and taxes are based on
the sale price there is again a wide variation on these costs. The median cost
in San Francisco, the most expensive market Zillow looked at, was over $55,000
while in Indianapolis, which has much lower home values and no transfer tax, it
is $8,238. Other costs in the middle ranges were $40,800 in Los Angeles, just
under $30,000 in both Boston and Washington, DC, and $23,300 in Portland,
Oregon.

While it can be argued that real estate commissions are also optional, there
is also a cost to owners who chose the for-sale by owner or FSBO route –
newspaper ads, printing costs, and a widespread assumption on the part of
buyers that they should share in the seller’s commission savings.

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