Understanding the Hidden Costs of Selling a Home

Selling your home is an opportunity to begin the next chapter of your life, whether you’re moving to a new state or upgrading to a larger house to start your family. Your home’s value may have appreciated during the years you’ve lived there, which means you’ll turn a profit when you sell. However, many homeowners are surprised by the costs and fees that come with selling, which reduce their total proceeds. 

Experts recommend allocating 10% of the home’s sale price to commissions, repair costs, and other fees. With the median home price currently at $416,900, property owners can expect to pay around $41,000 to sell their homes.   

There are also concerns about agent commissions following the August 2024 NAR settlement, which means it’s more important than ever to understand all of your selling costs upfront.

Use this guide to discover the hidden costs of selling a home and how to negotiate unwanted fees. This will help you set a clear budget for what you stand to gain from the home sale. Moving can be expensive, so make sure it’s the right choice for you and your family.

Transfer Taxes and State-Specific Fees

One of the first hidden costs to explore is the transfer tax in your area. While some states don’t have a transfer tax, others have taxes based on the percentage of the home’s value. This alone can highlight how it’s more expensive to sell a house in some states than others. For example, Arizona doesn’t have a transfer tax, but Delaware has a 4% tax. Homeowners in Delaware who sold a $400,000 property pay $16,000 more in taxes than sellers of similar properties in Arizona. 

With that, here are some of the most expensive markets to sell your home: 

• New York City has a combined state and city transfer tax that can reach 3.278%. 
• Washington, D.C. has a 2.9% transfer tax plus recordation tax.
• Chicago charges $10.50 per $1,000 in combined city and state taxes.

Your real estate agent should also let you know if you are required to hire an attorney when selling a home. Nine states require you to work with a real estate attorney during closing. These are Alabama, Delaware, Georgia, Massachusetts, New York, North Carolina, South Carolina, Virginia, and West Virginia. Attorney fees will range from $500-$3,000, depending on transaction complexity. New York often requires separate attorneys for each party, doubling the costs. 

Talk to your real estate agent and review any costs related to transfer taxes, attorney fees, and other expenses. They should be able to walk you through the expected fees and identify ways to lower them. You shouldn’t have any surprises in your closing costs, no matter how tight negotiations are between the buyer and seller.

Pre-Sale Preparation and Repairs

The home sale costs start before your property ever hits the market. On average, sellers spend $5,400 to prepare their home for listing. They complete a series of repairs, upgrades, and aesthetic improvements to make the house more desirable to potential buyers. 

Evaluate your home and consider what improvements might be necessary to maximize your profits and keep buyers interested. For example, if you have an old roof, you may decide to replace it before listing the property. A new roof is highly desirable in some areas, like Florida. 

Focus on essential repairs that would get flagged during the home inspection and small improvements to make the house more desirable. Investing in landscaping isn’t a critical repair, but it can create a positive first impression for buyers. Avoid making cosmetic changes to the house (like replacing a bathroom vanity or upgrading the floors) because your future buyers might hate this style. It’s a waste of time to make cosmetic changes that get ripped out right after closing. 

Here are a few of the highest-ROI (return on investment) projects you can choose, based on agent data: 

1. Professional cleaning ($200-$400): 400% ROI
2. Paint touch-ups ($500-$2,000): 300% ROI
3. Carpet cleaning/replacement ($500-$3,000): 250% ROI
4. Landscaping improvements ($500-$2,000): 200% ROI
5. Kitchen updates ($5,000-$15,000): 85% ROI

There are also seasonal considerations to review when deciding what you want to spend money on. For example, spring sellers spend 15% more on landscaping but recoup it through faster sales and higher prices. Investing in some beautiful flowers can help stage your home and make it more desirable. 

Invest in a Pre-Listing Inspection

Sellers often ask if they should get a pre-listing inspection, and the decision is ultimately up to you. Inspections cost between $300 and $500 on average (and may be more for larger homes) but are useful for identifying critical issues. If you can address these problems before you start showing the home, you can streamline the sale process. A pre-listing inspection prevents surprises when your house is under contract. 

Certain regions of the United States have specific inspection requirements. Here are a few examples. 

• Florida: Four-point inspections look at the roof, HVAC, electrical, and plumbing, and cost around $350.
• California: Certain zones may need seismic retrofitting, which can cost up to $5,000. This proves that your building is resilient to earthquakes. 
• Northeast: You may need to complete heating system certifications and oil tank inspections. 

Know what inspections are required in your area for a home to sell. Pre-inspections can give you peace of mind once your buyers start their due diligence.

Staging and Marketing Costs

Home staging has evolved from an optional practice to a requirement in many markets, but costs can vary by location, property type, and the number of rooms you plan to stage. Most home sellers will pay between $837 and $2,924 to stage a home, with some sellers paying even more if they have large properties. 

Here’s a breakdown of common price points for different staging services. 

• Consultation only: $200-$500 (The owner implements recommendations from the staging company.)
• Soft stage: $500-$2,000 (The staging company only provides accessories and art.)
• Partial stage: $1,500-$4,000 (They only stage key areas like the living room and primary bedroom.)
• Full stage: $3,000-$10,000+ (The company stages the entire home.)

Even if you only need to declutter your home, it’s important to budget for a storage unit where your items will be stored. Staging and storage costs will vary depending on how long your home takes to sell. If your home stays on the market for longer than you expect, you could pay more in monthly rental rates than you planned.

Marketing Requirements and Expenses

When you interview real estate agents, ask them about their marketing strategies and any costs you can expect to incur. Some agents take on the marketing costs as part of doing business, while others expect their clients to cover these expenses. Here are a few common marketing costs related to selling your home. 

• Professional photography: $200-$500 (now standard)
• Matterport/3D tours: $300-$800 (expected in $500K+ homes)
• Drone photography: $250-$500 (essential for acreage)
• Floor plans: $100-$300 (required in some markets)

Not every house needs all four of these elements. Your agent might not find drone footage necessary or need to create 3D tours. In hot seller’s markets, basic photos might suffice. These images would be enough for prospective buyers to schedule showings. However, homeowners entering buyers’ markets might need full marketing packages. 

By interviewing multiple real estate agents, you can see which marketing elements are essential and what their costs are. This can make you confident in the Realtor you hire and help you know what kinds of deliverables to expect.

Closing Costs Beyond Real Estate Commissions

Real estate commissions are one of the biggest closing costs that sellers cover. However, you don’t want to overlook other expenses that will take away from your profits. Here are a few fees you may come across that will vary based on your house and location. 

• Title insurance: 0.5-1% of the sale price
• Escrow fees: $500-$2,000
• Recording fees: $125-$250
• Wire transfer fees: $25-$50
• HOA transfer fees: $150-$500
• Prorated property taxes: Varies by timing
• Home warranty for buyer: $400-$800 (negotiable)

Many of these “standard” fees have negotiable elements. For instance, sellers can shop for title companies, potentially saving $500-$1,000. In some markets, buyers pay certain fees that sellers in other markets cover. If multiple buyers are bidding on your house, some might be willing to take on these fees as part of their concessions. Knowing how to negotiate and what you can negotiate is crucial for lowering your total closing costs.

Capital Gains and Tax Implications

The capital gains tax might be a surprise to some sellers who move out of their homes. Sellers pay capital gains on the profits of their home sale, which is the price they sold the house for minus the purchase price and other relevant costs needed to prepare the home. For example, if you bought a house for $300,000 and sold it for $500,000, then your taxable capital gains would start at $200,000. 

If you are selling your primary residence, you can use the capital gains tax exclusion to reduce your burden. This is $250,000 for single filers and $500,000 for couples filing jointly. Using the example above, this tax exclusion eliminates your capital gains tax burden. 

Additionally, you can also deduct selling costs from your capital gains. These include things like agent commissions, home improvements needed for the sale, and real estate marketing expenses.    

Sellers often need to have lived in the home for two years to qualify for the capital gains exclusion. However, there are also partial exclusion options for work-related moves and 1031 exchanges for investment properties. Even if you don’t have to pay the federal capital gains tax, you may need to pay on a state level. Eight states don’t have a capital gains tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming), while the rest have varying levels. California has the highest rate at 14.4%, followed by Minnesota at 9.85%. 

If you are unsure whether you need to pay capital gains tax, consult with a tax professional. They can outline your total profits, deductions, and exclusions if you qualify for them. Having an estimate of your tax burden ahead of time can help you when it’s time to file.

Carrying Costs and Market Timing

There are additional hidden costs of selling a home that can add up during the real estate process. You still need to keep the home in good working order, even if you are making offers on your next property. Here are a few carrying costs you can expect if your house stays on the market longer than you planned. 

• Mortgage payments: $2,000-$4,000/month average
• Property taxes: $500-$1,500/month
• Insurance: $150-$400/month
• Utilities: $200-$500/month
• HOA fees: $100-$1,000/month
• Maintenance: $200-$500/month

During this time, you are still responsible for any repairs and damage to your home. Even if you are under contract, you need to keep the house in good working order. 

Real estate market timing can affect your total costs. For example, spring sales (from March-May) command 12.6% of premiums but require winter preparation expenses. Fall sellers avoid peak competition but may carry costs through slower winter months. Each additional month that your house is for sale could accrue $3,000 to $6,000 in carrying costs, depending on your specific financial situation. 

Even if you have a quality house, the local market can determine how long it takes you to sell the property. Here are a few estimates for the average days on market for summer 2025.  

• National average: 37 days
• Miami: 69 days
• Austin: 66 days
• Chicago: 53 days
• Atlanta: 42 days
• Denver: 27 days
• San Diego: 23 days
• Seattle: 15 days 

This doesn’t mean that you are guaranteed to sell your house in Seattle in two weeks. Rather, this data can serve as a guide for how hot a market is and how much competition you are likely to experience as a seller.

How to Minimize Costs When Selling Your Home?

It’s easy to get caught up in your original listing price without considering the final profits you will make at the closing table. Not only do you need to look at the sale price, but you also need to consider all of the commissions and fees that come with it. Here are a few ways you can reduce your overall costs to walk away with the highest possible profits. 

Commission Negotiation

Interview multiple agents about their fee structures. This will tell you the pay rates they expect while allowing you to negotiate lower commissions. In many cases, sellers pay 6% commission on the home sale, which the listing agent splits with the buyer’s agent. You may be able to negotiate your fees down to 5% (or even lower) to save on commissions. 

Even a one percent commission decrease can add up. On a $400,000 home sale, sellers can save $4,000 on commissions alone through careful negotiation. You can also look into flat-fee Realtors and low-cost agents. You might only pay $500 to sell your home. (Remember that you will still be responsible for the buyer’s agent’s commission.) 

Some agents will not accept lower pay rates. Some may walk away from your offer or refer you to a colleague who will work with you. This is a risk sellers take when they offer lower commissions.

Timing Optimization

Be strategic about when you list your house. You want to list during peak season when buyers are looking at homes, but not when there is a flood of other houses on the market. If there are too many homes available, buyers will not want to negotiate, and you might take on more costs than you want. Too many available homes can also drive down sale prices as buyers feel empowered to negotiate. 

You can also optimize your timing by completing repairs in the off-season when you can take advantage of favorable contractor rates and calendars. For example, replacing your HVAC system in the summer might cost more and take longer than you expect. However, if you make this a fall or winter project, you might be able to save. 

Selling a home requires a clear strategy and careful timing. Set yourself up for success with detailed planning.

Smart Preparation

There are other ways to be strategic if you want to save money. Before you list, schedule a pre-listing inspection and make repairs ahead of time. This way, you won’t have to contend with buyers negotiating the price lower than you expect. Focus on high-ROI improvements that maximize value while limiting your costs. 

If you aren’t sure where to start with your home improvements, invite potential agent candidates into your home. Not only can prospective Realtors make recommendations for repairs, but they can also share cost-effective vendors who do high-quality work. You don’t have to go through this process alone. 

Closing Cost Management

Finally, don’t take closing costs at face value. Shop around for title companies and ask about their costs. Look into different service providers and evaluate the quality of their work against their fees. Know that almost everything is a negotiation in real estate, and you can lower your overall costs if you speak up.

Face the Hidden Costs of Selling a Home Head On 

Selling a home can be expensive, but it doesn’t have to be a mystery. While selling costs can total 10-15% of the sale price, informed sellers who understand local markets can reduce this by 2-3% through strategic decisions. Know what you are paying for and where you can lower your costs. This can help you save thousands of dollars during your move. 

A streamlined real estate experience starts with a good agent. Start your search with FastExpert. You can find experienced professionals in your area who will advocate for you. Explore some of the top profiles in your area and set up a few interviews. Even talking to experienced Realtors can help you identify ways to save.