Buying and maintaining a home is expensive, but selling it is also costly, a new report says.
According to a June 17 report from Clever Real Estate, it typically costs $54,616 to sell a home in 2024. Nearly half of home sellers surveyed (42%) said their selling costs were higher than expected, the report said.
“When people think about selling their home, they think about how much money they will make from selling their home, not how much they will spend,” says Jaime Dunaway-Seale, data writer at Clever Real Estate.
“The costs end up being very high and then they are surprised and disappointed because it reduces their profits,” Dunaway-Seale said.
In May, Clever Real Estate surveyed 1,014 Americans who sold a home between 2022 and 2024 about their attitudes toward the home selling process. The company also conducted an analysis of seller costs based on median home prices in May.
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About 39 percent of the total cost – $21,603 – is spent on broker commissions, according to the report.
But with a landmark case regarding realtor commissions about to take effect, sellers will no longer have to foot the entire bill. If a seller chooses not to pay the buyer's realtor commission, it could “reduce their costs by about $10,000,” Dunaway-Seale said.
Other typical expenses include repairs to the home prior to listing and in response to inspections, which Clever Real Estate estimates at $10,000; closing costs ($8,000); buyer concessions, or expenses the seller is willing to pay the buyer to reduce the initial purchase cost ($7,200); moving costs ($3,250); marketing and advertising costs ($2,300); and staging costs ($2,263).
But home sellers should focus on “maximizing the efficiency of the transaction” and “not just trying to save costs,” says Mark Hamrick, senior analyst at Bankrate.
“Ultimately, [with] With many of these fees, it doesn't hurt to negotiate, and that goes for real estate commissions too,” Hamrick said.
“There are a lot of costs involved”
According to Clever Real Estate's report, in today's real estate market, homebuyers do not want to inherit homes that need renovation due to limited costs.
“There are a lot of costs associated with it,” says certified financial planner Kashif A. Ahmed, founder and president of American Private Wealth in Bedford, Massachusetts. “You may have to do some renovations to be able to sell it.”
If a buyer makes it to the home inspection and finds defects that weren't apparent or disclosed during the initial inspection, they may have the opportunity to ask the seller to make necessary repairs, Daryl Fairweather, chief economist at Redfin, recently told CNBC.
This is especially true in real estate markets, where homes for sale stay on the market longer because they give buyers “bargaining power,” according to Orphe Divounguy, a senior economist at Zillow.
According to Clever Real Estate, sellers often have to pay up to $10,000 in repairs, improvements and renovations before and after listing.
“There may be times when a buyer says, 'I want you to fix this before I buy it.' And then you say, 'Well, to get rid of this thing, I'll spend the extra money,'” Ahmed said.
However, the highest cost an owner incurs when selling a home is the real estate agent's commission, says Ahmed.
“The rule change has not yet come into force”
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In March, the National Association of Realtors (NAR) agreed to a $418 million settlement with the American real estate broker association National Association of Realtors (NAR) in an antitrust case. A federal court jury found that the association and other real estate brokers had conspired to artificially inflate commissions for buying and selling real estate.
“We simply included it [in the Clever Real Estate analysis] now because the rule change has not yet gone into effect at this time,” Dunaway-Seale said.
A final settlement with the NAR takes effect in August and there is a “much more clearly defined notion that sellers are not responsible” for a buyer's brokerage commissions, says real estate attorney Claudia Cobreiro, founder of Cobreiro Law in Coral Gables, Florida.
In some areas, such as Miami, commission rates from the Multiple Listing System (MLS) have also been eliminated, she noted.
According to NAR, the new mandatory MLS policy changes will go into effect on August 17, 2024.
However, “that's the political side of it,” she said. “The practical side is that we still see the notion that realtors are needed,” and most buyers may not have $10,000 to spare on top of closing costs and the down payment required to purchase, Cobreiro said.
Dunaway-Seale agreed: “Sellers may not be required to pay the buyer's agent commission, but for many of them it is still another incentive to attract buyers.”
Opportunities to reduce costs
The seller must pay closing costs; everything else depends on the home seller's priorities or how quickly they need to sell the property, Dunaway-Seale says.
Here are some ways to lower or reduce the costs associated with selling a home:
1. Selling without a broker: Homeowners may try to sell the home themselves and possibly abandon realtor services altogether, Dunaway-Seale said.
“But they won’t make as much profit when they sell,” she said.
Fifty-nine percent of sellers who didn't hire an agent did so to save money, Clever Real Estate found. Yet, according to the report, sellers who worked with an agent sold their home for about $34,000 more than those who didn't hire an agent.
Keep in mind that completing the transaction without a real estate agent can be risky.
Signing the contract is the bare minimum. There are so many things that happen during the transaction that really require the expertise and guidance of someone who understands the process, Cobreiro previously told CNBC.
“We're talking about one of the most expensive and consequential transactions of our lifetime,” Hamrick said. “These fees can seem a little daunting at first, but the good news is that most people don't get into a transaction like this where they're essentially going to lose money.”
2. Reduce concession, staging and marketing costs: “If sellers don't really care about selling their home quickly, they might be able to make fewer concessions,” Dunaway-Seale said. Concessions are expenses the seller is willing to incur in order to reduce the buyer's upfront costs.
Cutting the budget for staging and marketing costs could also lead to cost savings because such tools help attract buyers, she said.