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Ouch! The Costs Associated with Selling Your House with a Realtor Are Surprising

Think you understand ALL of the costs associated with selling your Cleveland OH house with a realtor? You might be surprised at how much selling a house on the market will cost you. Before you sign a contract with an agent and list your house MAKE SURE you read this article in full.

Are you thinking about selling your house with a real estate agent or as a for-sale-by-owner? Before you do you should make sure you understand all the costs associated with it.  You will probably be shocked by how much it actually costs to sell a house on the market with a realtor or as a for sale by owner.

You might be asking yourself some of the following questions:

  • What are the costs associated with selling a home?
  • How much does it cost to sell a house with a realtor? (spoiler: the answer could be thousands)
  • When selling a house who pays for what? What does the seller have to pay when selling a house?

This article will help explain the costs associated with selling your house with a realtor in Cleveland and answer your questions. 

As we outlined in our article, The Ultimate Guide To Selling a House, there are multiple options for how to sell a house when the time comes.  These include selling a house with a realtor, selling a house as a for sale by owner (FSBO), and selling a house for cash to a we buy houses company.  

Outside of the timing and convenience factors, if you are selling your house with a realtor or as a for sale by owner  (FSBO) there are several costs, some hidden or unexpected, that normal homeowners do not understand or even know exist.  

In this article, we’ll go over a non-exhaustive list of the costs associated with selling your house with a realtor on the market.  At a later date we will follow-up with an additional article outlining the costs associated with selling your house as a for sale by owner (FSBO).  

Meet John, Our Hypothetical Homeowner

To help explain and quantify the costs associated with selling your house with a realtor we will be using a story to illustrate what a seller should expect.  Our hypothetical homeowner is John. His house is a hypothetical 1,500 square foot, single family home in a decent neighborhood that has a market value of $100,000.  He has owned his home for 10 years.  John is getting older and wants to downsize so he decided to sell.  He has interviewed some realtors and selected one to work with.  

Now, let’s see what costs associated with selling your house with a realtor. 

The costs associated with selling your house with a realtor on the market in Cleveland

Let’s look at the costs associated with selling your house with a realtor in rough sequence from when the process starts (in the pre-listing preparation stages) to when the sale closes. 

The first bucket of costs John will incur involve pre-listing improvements and house preparation.  Usually when a realtor provides an estimate of what a house will sell for they will suggest certain improvements that will be required for you to get that price. 

Costs Associated with House Improvement and Preparation For Listing 

Rough Estimated Cost in our Example: $1,600

Costs associated with cleaning before an open house

A house has to be spotless, clean and presentable in order to sell for top dollar.  In turn, the different costs to clean a house are definitely costs associated with selling your house with a realtor on market. You will want to wash everything from your floorboards and walls to windows, appliances, cabinets, toilets, showers/tubs, floors, etc.  This is called a deep clean and its involved and can be very expensive. According to thumbtack a house cleaning will typically cost $150 – 250 per deep clean.

Costs associated with Professional carpet cleaning

If a house has carpets they should most likely be cleaned if they are not replaced outright. In turn, carpet cleaning costs are surely costs associated with selling your house with a realtor on market that a seller should expect. According to Homeguide.com the national average cost of carpet cleaning is between $25 to $70 per room.   Budget for at least $200. 

Costs associated with Interior Painting

Paint can help bring new life to a house and will add a lot of appeal to buyers.  Painting a house in nice, neutral colors to help the house appeal to the largest group of buyers may be recommended by your realtor unless the paint in the house already is neutral and in good condition. 

Because of the impact painting can have, painting costs should be budgeted as costs associated with selling a house with a realtor on market. 

According to homeadvisor.com in 2020 the average cost to paint a house interior ranges from $2 to $6 per square foot. Depending on the size of your house painting can range from ~$750 for a small house to $2000 for a larger house and up.  

Let’s say for our example John finds a great deal and paints only a portion of his 1,500 square foot home.  The job costs him $1,000 with labor and materials.  

Costs associated with Landscaping

Just like interior cleaning, landscaping costs will most likely be costs associated with selling your house with a realtor on the market. Landscaping adds huge value by improving your home’s curb appeal.  Unfortunately, it is also adds another cost to your budget when selling your house on market with a realtor.  If you aren’t a skilled landscaper able to do the work yourself expect to pay a few hundred dollars to have your lawn cut and your shrubs trimmed.  If you need mulch, de-weeding and flowers/plants planted expect at least a few hundred more. 

Costs Associated with Home Repairs, Upgrades and Staging Prior to Listing 

Rough Estimated Cost in our Example: $6,200 

The second bucket of costs associated with selling your house with a realtor on market involve pre-listing home repairs and improvements.  A realtor may review a house thoroughly and suggest certain repairs and improvements that will a seller get top dollar for their house. In turn, a seller should expect these to be costs associated with selling your house with a realtor on the market.

Repairs and Fixes

First, sellers should consider the broken and faulty items that they know of that will come up in a buyer’s inspection.   These broken items should be fixed prior to listing as it will show the house much better and reduce the chances a buyer is scared off.  Buyers will be turned off by a cracked window, broken cabinets, a furnace from 1980 making a clunking noise, the roof that is on its last limb, the water heater tank that has completely rusted pipes, etc.  

It is impossible to estimate how much your  house will cost in repairs prior to listing it.  Just know that you should expect to pay for repairs, either before you list (if you are proactive) and/or after the buyer does an inspection.  In other words, pre-listing repair costs should be budgeted as costs associated with selling your house with a realtor. 

For our example, let’s say John’s hot water heater was past its useful life and needed to be replaced ($1200). 

Upgrades/Updates

Second, upgrades/updates a seller can make to improve the value of your home are another cost that a realtor will surely suggest prior to listing. As such, upgrades/updates are most likely costs associated with selling your house with a realtor on market.  The costs associated with upgrades can range depending on the work done.  Work can range from changing carpets to solid flooring like tile or laminate, upgrading kitchen cabinets and countertops, adding a backsplash, updating bathroom vanities and fixtures and/or replacing or tiling entire shower units, etc. 

Again, the costs you should expect will depend on the condition of your house and the materials that are common for your market (at the price you want to get). 

For the sake of our example say John had some grubby carpets replaced with nicer floor coverings and two outdated bathrooms updated.  The total cost for everything came in at $5,000, which is a bargain, but we can be conservative for example purposes. 

Staging

The third cost in this bucket associated with selling your house with a realtor is the cost of staging. 

Again, your realtor will want to make sure that a house shows very well and brings in top dollar.  In turn, in addition to the basic improvements and cleaning you did they will most likely suggest suggest a seller stage the house (known as staging) to make the home look ideal in terms of livability.  As a result, add staging costs to the list of costs associated with selling your house with a realtor. 

According to a realtor.com article “the average cost for most stagers is $300 to $600 for an initial design consultation, and $500 to $600 per month per staged room.”  For our example sake, John decides to stage his house, which costs him ~$1,200.    

John’s work and money have paid off. Because of his improvements and staging he has gotten a solid, accepted offer of $95,000 on his property, which is 5% off of his listing price of $100,000.  

Next in the selling process, the buyers schedule their pre-purchase inspection of the home.  As you may expect the inspection stage will surely bring about more costs associated with selling your house with a realtor.

Costs Associated with Repairs Resulting From the Home Inspection

Rough estimated cost in our example: $4,500

Just so you as a potential seller are aware, even if a seller does repairs and improvements prior to listing a house a buyer that is doing an inspection will almost always ask for repairs prior to closing or concessions at closing because of imperfections with the house.  The only exception would be if you list the house as-is with the right to inspect the property (but you state you will not make any repairs).  

As such, the next bucket of costs associated with selling your house with a realtor are related to repair costs related to the buyer’s inspection.  Inspection repairs are surely costs associated with selling your house with a realtor via a traditional sale on the market unless you are listing it as-is.  

John’s buyers do their inspection and come back with a laundry list of smaller items and a few big ones.  After some back and forth, much disagreements and a ton of frustration, both sides agree on a subset of repairs that John will remedy before closing.  John’s roof is 20 years old and the inspector noticed a good amount of deterioration during the inspection. He recommended it be replaced ASAP and the buyers agreed. 

The buyers demanded a $6,500 credit at closing, but John knew he could get a better price from his contractor connections if he had the work done.  John orders the repairs before closing and provides proof of the repairs to the buyers.  The buyers are satisfied, and the process moves forward.  The roof replacement cost John $4,500 (a discount price for sure). 

Cost Associated with Closing and the Closing Process

The next bucket of costs are associated with closing costs and the activities that lead up to closing day. During the time leading up to closing and on the day of closing John can expect to see some additional, large costs.  Let’s look at the costs associated with the closing process now. 

Seller Costs Associated with the Buyer’s Closing Costs

Rough estimated cost in our example: $1,250

What are the closing costs associated with selling your house with a realtor? Closing costs can vary depending on if a seller has agreed to pay a portion or all of the buyer’s closing costs.  When a seller is struggling to get a good offer on their house they may have to agree to pay all or a portion of the buyer’s closing costs to entice them to purchase the house.  

Regardless if you are paying only your closing costs or a portion or all of your seller’s closing costs they will definitely be costs associated with selling your house with a realtor via a traditional sale on the market with a realtor.  

The only way to get out of paying closing costs is to sell a house to a cash buyer via a we buy houses company.  These companies will almost always cover all of the closing costs for both sides. 

Realtor.com has a good article titled Closing Costs for Sellers: Common Fees Associated with Selling Your Home. This article includes realtor commissions and others as part of a larger “closing cost” bucket.  We will break those costs out in a bit more detail in this article. 

For our example John agrees to pay a portion of the seller’s closing costs, which will cost him about $1,250. 

Costs associated with Attorney Fees

Whether you as a seller will have to pay attorney fees, or even need an attorney will depend on norms in your state and/or specific market.  If you do need an attorney, they will look over the closing documents and represent you during the process.  You should expect to pay around $1000 for this service if necessary. 

For our example, let’s say John lives in a market where a title company represents both the buyer and the seller so no attorney fees are necessary. 

Costs Associated with Title Insurance

Estimated cost in our example $1,000

According to Realtor.com the seller will most likely be on the hook to pay for the buyer’s title insurance premium.  

For our example John pays $1000 for the buyer’s title insurance premium.  

Costs Associated with Prorated Property Taxes 

Estimated cost in our example: $1,000

When you sell a house you will have to split (called a pro-rated portion) the property taxes for the year according to the date of sale.  You should keep this in mind as your obligation to pay your property taxes will not be relieved if you sell your house before the date of tax collection.  

In our example, John’s annual taxes are $2,000. For simplicity sake say John closes on the sale of his house on June 1st (exactly half way through the year).  In this case, John would be on the hook for $1,000. 

Costs Associated with Transfer Tax For Property Taxes

Estimated cost in our example: $750

Some cities charge the seller to transfer the property taxes to the buyer.  In this thelendernetwork.com article entitled 14 costs of selling a house you should prepare for they estimate that the transfer tax fee will cost $750 on average. 

Big Costs Associated with Realtor Commissions

Estimated cost in our example: $5,700

What are the costs associated with selling your house with a realtor? When a seller uses a realtor to sell their house they will be responsible for paying the realtor a commission.  In turn, realtor commissions will definitely be a cost associated with selling your house on market with a realtor.  

The commission is equal to a percentage of the sale price (not a % of your net profit).  According to this Redfin article the typical realtor commission is ~6%.  Some markets will be higher; some will be lower. 

The commission the seller pays is split between the buyer’s agent and the seller’s agent, but do note that the seller will pay the full realtor commission (the buyer does not pay any portion of the realtors’ commissions, not even for the buyer’s agent). 

In our example, John sells his house for $95,000 so he will have to pay a 6% realtor commission of $95,000 * 6% = $5,700.  

Costs Associated with Holding Costs

Are holding costs associated with selling your house with a realtor?  Holding costs can be associated with any type of sale.

If you are planning to move out before you sell or close on your house be aware that you will certainly incur holding costs.  Holding costs are just that, the costs to hold the property, regardless of if you are living there or not.  These costs include (but are not limited to) things such as utilities (utilities cannot be turned off as the house needs to be shown in functioning order and inspected in full), taxes, insurance, maintenance, etc. It goes without saying that these costs add up, especially if you are paying for more than one house before you close. 

In our example, John was living in his house until the day of closing so he incurred no holding costs.  If John moved out prior to closing, he surely would have incurred these holding costs. 

Costs Associated with the Mortgage Payoff 

Paying off the remainder of a mortgage is a cost related more to simply satisfying a debt obligation than it is a cost tied to the actual sale of a house.  Regardless, it needs to be paid off when a house with a mortgage is sold.  

I am including this cost here here to make readers aware of it. If you have a mortgage on your house then you will have to pay it off when you sell the house that the mortgage is tied to.  

There are a few situations where the mortgage might be transferred to the buyer, but this is beyond the scope of this article.  For the purposes of this article just know the payoff on your mortgage is certainly a cost you will incur when selling your house.  

In our example John did not have a mortgage on the property he was selling.  

 

The End Result: John’s Net Profit at the End of the Day

By the time John closes and the house is sold the net profit that John gets a check for is much different from the sales price he agreed on with the buyer.  Needless to say, John is rather disappointed. 

To help explain this a seller’s net profit is the money that they actually get to keep.  Net profit is calculated by starting with the agreed upon sale price and subtracting out all of the costs (and others) that we listed here plus subtracting your debt obligation to your lender for your mortgage.  

Let’s look at the net profit John actually received and is able to keep after closing on his house.  

As you remember John agreed on a sale price of $95,000.  

To sell his house John incurred the following costs:

  • $1,600 for basic improvements (cleaning, painting and landscaping)
  • $6,200 for home repairs and upgrades prior to listing his house (replacing his hot water tank, upgrading floor coverings and updating 2 bathrooms). 
  • $1,200 for staging
  • $4,500 for repairs that were required from the buyer as a result of the home inspection
  • $1,250 for a portion of the buyer’s closing costs
  • $1,000 for the buyer’s title insurance
  • $1,000 for his prorated portion of his real estate taxes
  • $750 for transfer tax fees
  • $5,700 for realtor commissions (@ a conservative 6%)

The total cost John incurred to sell his house was a staggering $23,200.  This is about 24% (or 1/4) of the sales price that John incurred in costs.  This means that instead of getting $95,000 John walked away with $95,000 – $23,200 = $71,800.  

Please keep in mind that some of the costs, such as upgrade costs, improvement costs, repair costs, landscaping costs and repair costs tied to a buyer’s inspection will vary greatly depending on the condition of your property. Also, keep in mind that the costs associated with closing will vary depending on if a seller does or does not pay the buyer’s closing costs and also on the norms of closing costs in a specific market.  

With that being said, the costs laid out should reasonably be expected by a seller when selling a house on the market with a realtor. 

Hopefully listing these costs out with some actual numbers (albeit not perfect) gave you a sense of what costs will most likely be incurred when selling a house.  

The key takeaway is to know that the price you and a buyer agree on will not be the amount that you walk away with on closing day. 

If you are interested to see how much it may cost to sell your house with a realtor, use our cost of selling a house calculator

Eliminating the Costs Associated with your house with a Realtor in a Traditional Sale

Most likely the only way to get away from these costs is to sell to a buyer that is buying 100% as-is and who will pay for all of your closing costs and fees and buy your house without a realtor involved. If this is an attractive option, check out our Ultimate Guide To Selling a House to see the details of selling your house to a we buy houses company with no costs.   

Who is Sesa Properties? 

Sesa Properties is a local, established real estate investing (we buy houses) company  operating in greater Cleveland, OH.

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The information presented in this article is for educational purposes only and should not be considered legal, financial, or as any other type of advice.

About the Author:

My name is Dan Sarao. I am the Co-Owner and Managing Partner of Sesa Properties, a cash home buying and real estate investment company operating in Cleveland, OH.  In my former life I was a marketing and product executive at a US based coatings company. I left that role to pursue my passion for real estate. I am motivated everyday to find and help homeowners who are in stressful situations and need to sell their houses quickly outside of the traditional sales process.

I love meeting and talking to new people and finding solutions, no matter what the situation. If you are a homeowner, investor, etc. and would like to work together or even just talk feel free to contact me personally at Dan@webuyhomescle.com.

 

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