Are there hidden costs to selling a home in Orange County? In most cases I think that there are unexpected costs, but I wouldn’t necessarily say they are hidden. There shouldn’t be surprise fees, but if you haven’t done your homework or hired a competent agent, you may find yourself facing some unexpected costs.
The truth is that it is going to cost money to sell your house. From closing costs to home prep, or even repairs that need to be completed, all these projects and fees add up to your final cost for transacting.
The Net Sheet
A Real Estate Agent should put together a Net Sheet for the seller which breaks down how much money the seller will receive when the house sells at the expected price. The Net Sheet takes into account most of the typical costs such as closing costs, reports, and termite work. It won’t, however, include atypical items like repairs and home prep projects.
Closing Costs
Typical closing costs include agent commissions, escrow fees, title insurance, transfer taxes, and prepaid property taxes. All of these fees are typically some percentage of the sales price of the home.
Each local region will have its own customs and norms as to whether certain costs are paid by the buyer or the seller. Closing costs in Orange County, for example, might be split up differently than they would be in San Diego.
Hidden fees?
If the seller or seller’s agent are knowledgeable about certain costs, they could be caught off guard. For example, some cities impose additional transfer taxes above over the those of the county. These can go as high as $4-5 per thousand of the sales price, which can quickly add up to a very large unexpected expense if you were unaware of the tax going in to the transaction.
The Solution? Do your homework, or hire someone who has!
Home Prep Costs
Most sellers will do some kind of home improvement project for listing their home for sale. Typical home prep projects could be anything from replacing doors, painting, carpet cleaning, or even kitchen and bathroom upgrades.
These projects can help improve the curb appeal of your home and ultimately help it sell for more. Again, sellers will typically limit the amount they spend on home prep according to the home’s value.
While these projects can help you sell faster and for more money, there is a limit. If you spend $50,000 improving a large home in a million dollar neighborhood, you will likely see a very nice return. But if you invested that same $50,000 on a $300,000 home, you will most likely not make that money back. It’s also important to make sure that you limit your efforts to cost-effective home projects.
Location, Location, Location!
Of course, the cost of selling varies significantly by region as homes prices do. But there are also region-specific costs that can feel like hidden costs if you are unaware of them and caught off guard. We already talked about the additional city transfer tax in some areas, but there are other costs to consider as well.
For example, the property may be situated in a Mello-Roose District, where additional taxes are imposed for local development purposes. Or, you may be in a flood or fire zone which would require additional insurance premiums.
All of these costs can be easily calculated well before you list or buy, but you need to actually go look for them, or make sure you hire an agent that will.
True Cost of Selling
Yes, selling your home will cost money, but it can still be a pleasant experience. In fact, 73% of home sellers overall said they were very satisfied with their experience.
The trick is to be as thorough as possible when determining your true costs. Take into account all closing costs, estimate how much you’ll likely spend on repairs, make sure you know all of the region-specific fees and taxes. As long as everything is accounted for, you should be able to avoid any nasty little surprises.