Why does it cost so much to sell a house?

From staging to commission expenses, here's what to expect

Close up of increasing stacked coins and house model
(Image credit: Getty Images)

You hear a lot about the burdensome cost of buying a home, but less about the costs that are involved in selling. Like the price of homebuying, the cost of selling a home can be steep. In some cases, too steep, as a federal jury ruled in late October that "the powerful National Association of Realtors and several large brokerages had conspired to artificially inflate the commissions paid to real estate agents," The New York Times reported.  

It's predicted this ruling could lead to major shifts in "the way agent commissions are now paid," causing "home buyers and home sellers to now question the standard practice of setting commissions between 5 and 6 percent," according to the Times. While that would certainly help ease the cost of selling, it wouldn't bring it down to zero, given all of the other costs that are typically involved in a home sale.

How much does it generally cost to sell a house?

The average "total cost of selling a house is about 10% of the sale price," according to Rocket Homes. The upper limit of average is a little bit higher, in Quicken Loans' estimate, generally around "10% – 15% of your home’s sale price."

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Here's an example of how that would play out: If you were to end up paying 10% of your home's sale price, "this means if you sell your house for $200,000, you can expect to subtract $20,000 from your overall profit on the sale," per Rocket Homes.

What costs are involved in selling a house?

So exactly what expenses are you covering as a home seller? Here are some of the common expenses you may pay:

  • Home preparation: Before you put your home on the market, you need to make sure it's ready, which can involve any necessary repairs and perhaps some cosmetic updates. According to Quicken Loans, "the average cost of sellers’ home repairs is often reported to be roughly $3,500 – $5,000."
  • Home staging: Another part of getting your home ready to show is staging, which involves arranging furniture and decor throughout your house. This can pay off, as it may help your home sell faster and for a higher price. However, expect to pay an average of $1,776, per U.S. News & World Report based on data from Home Advisor.
  • Real estate commission: The largest chunk of selling costs is usually real estate commission fees, which generally run 5% to 6% of the home sale price, per Rocket Homes. According to U.S. News & World Report, "while it is possible to negotiate real estate commission, it's unlikely that it will be lowered."
  • Closing costs: Closing costs, which are "fees that are paid to finalize the transaction and transfer ownership of the home to the buyer," can also constitute a large portion of your home sale costs, as "sellers can expect to pay 2% to 4% of the sale price of the home in fees and taxes," per U.S. News & World Report. 
  • Taxes: You'll also likely lose some money to taxes when you're selling. Though many are eligible for a capital gains tax exemption up to $250,000, those who aren't will have to pay capital gains taxes if they sell their home for more than they paid for it, explained Bankrate. Other taxes you might pay are property tax and real estate transfer tax.
  • Mortgage payoff: "If you are still paying on your mortgage, you’ll have to pay off your mortgage with the profit from the home sale," Quicken Loans explained. Further, some mortgages charge a prepayment penalty, which will get added to the balance you owe.

Is there any way to reduce the cost of selling a home?

There are a few things you can do to mitigate the amount you end up paying to sell:

  • Reconsider optional costs: Not every cost involved in selling a home is totally necessary. For instance, you might skip out on staging or improvements and opt to sell your home as-is.
  • DIY minor repairs: You might be able to save if you do some things yourself. However, consider "the time involved and whether an expert will do the job better," Rocket Homes advised.
  • Shop around for agents: Before settling on a listing agent, interview some different candidates and find out how much they charge. Per Nerdwallet, "some are willing to negotiate their rates," though you'll want to "make sure you agree on commission terms in writing."

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