When selling your house in Chicago, it’s essential to understand the myriad costs involved beyond just the agent’s commission.
On average, the total cost of selling your house in Chicago can account for around 10% of the sale price. For instance, if your house sells for $200,000, you might anticipate deducting approximately $20,000 from your total profit. These costs can vary significantly due to several factors.
Let’s delve deeper into the various expenses you should anticipate when selling your Chicago home.
Preparing for the Sale
Showcasing your home’s best qualities is crucial to attracting potential buyers. The average cost of staging a home involves placing furnishings and decorations to highlight its best features. Staging helps potential buyers visualize themselves living in your space, which can speed up the selling process and potentially increase your home’s selling price.
Additionally, curb appeal plays a significant role. The size of your home and the complexity of the work required will determine these costs. While you can save money by handling these tasks yourself, consider the time commitment and whether hiring a professional might yield better results.
Agent Commission
Real estate agents provide invaluable services when selling your house in Chicago. A listing agent will set up a photo shoot, post the listing to the multiple listing service (MLS), schedule showings, field inquiries, and much more. These services save you considerable time and effort but come at a cost.
Sellers typically pay commission fees, commonly referred to as Realtor fees, between 5% and 6% of the sale price. For a $200,000 home, this translates to $10,000 to $12,000.
Selling the house yourself, also known as For Sale By Owner (FSBO), can help you save on the listing agent’s commission. However, if the buyer uses an agent, you may still be responsible for paying their commission, which could range between 2-3% of the sale price..
Considering that nearly nine out of ten buyers work with a real estate agent, according to the National Association of REALTORS, it might be necessary to pay at least a portion of the commission fee.
Seller Concessions
Seller concessions are incentives you offer to cover a portion of the buyer’s closing costs. This might include paying for the buyer’s title insurance or inspection charges. Data from Opendoor indicates that seller concessions typically represent 1.5% to 2% of the home’s sale price.
The type of loan the buyer uses can affect the concessions you may need to offer. For instance, concessions of up to 3%, 6%, or 9% of the home’s selling price are permitted for conventional mortgages that adhere to Fannie Mae’s criteria, with the maximum amount determined by the buyer’s down payment. The Federal Housing Administration regulates this amount at 6% for FHA loans, while the Department of Veterans Affairs caps concessions on VA loans at 4%.
Closing Costs
Closing costs are fees paid by both the buyer and seller to cover the expenses of the house-selling process. For sellers, these costs usually range from 1% to 3% of the sale price. Common closing costs for sellers include:
- Closing Fee: A fee paid to the title company or attorney handling the closing process.
- Transfer Taxes: Taxes imposed by the local government when the property changes hands.
- Recording Fees: Fees for recording the sale with the local government.
- Attorney’s Fees: Legal fees if you hire an attorney to represent you.
- Outstanding Property Taxes: Any unpaid property taxes up to the closing date.
Mortgage Payoff
If you still owe money on your mortgage, you will need to pay off the remaining balance when selling your house in Chicago. Contact your loan servicer to find out the exact payoff amount and whether there is a prepayment penalty for paying off your loan early. If you’re considering buying and selling a house simultaneously, keep this sum in mind, as the costs can add up.
Capital Gains Taxes
The profit you make from selling your house in Chicago may be subject to capital gains tax. If the property is your principal residence and you have lived there for at least two of the previous five years, you may be eligible for a capital gains tax exemption. As of today, married couples can exclude up to $500,000 of the profit, while single homeowners can exclude up to $250,000.
For example, if you bought your house for $200,000 and sold it for $300,000 after five years, you would have a $100,000 capital gain. Since this is below the $250,000 exemption for single homeowners, you would not owe capital gains tax on the profit.
Home Repairs
Before signing on the dotted line, most buyers request a home inspection to assess the property’s condition. If the inspection report identifies issues, buyers may ask you to pay for repairs. The cost of these repairs can vary significantly based on the state of your home.
To avoid last-minute negotiations, consider conducting a pre-listing inspection. This allows you to identify and address any issues beforehand. While you can handle some repairs yourself, it’s often best to hire professionals to ensure the job is done correctly and to avoid potential DIY mistakes.
Marketing Costs
Effective marketing is essential to attract potential buyers. While your real estate agent will handle much of the marketing, there are additional costs you might incur, such as:
- Professional Photography: High-quality photos will make your home stand out in listings and cost between $250 to $500 or more.
- Virtual Tours: Especially useful during times when in-person showings are limited, virtual tours can cost between $100 and $400.
- Online Listings: While many online platforms are free, some premium listing sites charge a fee.
Conclusion
The costs associated with selling your house in Chicago can add up quickly, often totaling around 10% of the sale price. By understanding these expenses and planning accordingly, you can better manage your expectations and finances throughout the selling process.
To ensure a smooth transaction and maximize your profits, consider working with a real estate professional who can guide you through each step and help you navigate the complexities of the real estate market.
Contact Property People LLC today to learn more about how we can help you sell your house quickly and easily without any cost or headaches. (312) 857-8572