Selling your home and purchasing a new one are two of the most exciting things you can do in your lifetime. With that being said, for many people who are considering selling and buying a home at the same time, it is easy to get swept away by the romantic vision of what their “new” life will be like without completely factoring in what exactly their big move will cost. Since people move for a variety of reasons, including downsizing as well as upgrading, the costs that are associated with the sale of your home and the purchase of a new one are not the same for everyone. Likewise, these costs change from state to state as well as from broker to broker. The only thing that you can be sure of when selling your home and purchasing a new one is that it will cost you more money than you thought if you are not paying attention The key to getting through this process without losing your head is to be prepared by trying to foresee every cost before it incurs. Here are some of the “hidden” costs of selling your home that you may not be aware of.
First of all, these costs are not really “hidden,” they are just not immediately considered by homeowners. The first thing you should do when selling your home is contact a licensed Realtor who can outline exactly what costs they imagine you will incur during the sale of your home as well as during the purchase of a new one. The typical fees that apply to this overall process include things like commissions, taxes, interest, closing costs, mortgage insurance, and principal payments. The rates for most of these factors are dependent on things like sale price, credit ratings and down payments. Other fees include things like administration costs, concessions, home inspection, HOA documentation fees, homeowners insurance, cost of repairs, closing costs and moving costs.
Most first time home sellers are blinded by the possibility of making a profit on the sale of their home and think that all the costs they will be subject to will be able to be paid for out of their earnings. While this is true for some things like commission, mortgage insurance and taxes, others costs must be paid up front. The one that usually gets people the most is the cost of the home inspection. This cost varies greatly depending on the specific home and is something that every homebuyer pays. Typically you can count on paying anywhere from $300 to $1000 dollars. The fee is based on the square footage and age of the home, which means the older and bigger your new home is, the more it will cost you. Concessions are the second hidden cost that most home sellers neglect to consider. Concessions are things that the buyer will ask of the seller. The cost of these items are sometimes taken out of the sale price and will be completed by the buyer once they have moved in. Other times, the seller will have to pay up front to comply with concession requirements. Furthermore, obtaining the current HOA documentation is another unforeseen cost. Depending on your HOA, this can run you anywhere from $100 to $200 and has to be paid at the appropriate time in the contract.
Although the cost of selling and buying a home can sometimes rub you the wrong way, it is important to keep the larger picture in mind. The ultimate goal is to get out of the home you currently have and into a new one that fits your needs better.