The hidden costs of selling your home

Just like buying a home, selling a house can come with many hidden costs that can quickly add up, making a dent in Americans' wallets. From small costs like repairs and upgrades to larger fees like transfer taxes, it's important to know what to keep in mind when budgeting to sell a home.

Yahoo Finance Reporter Dani Romero joins Wealth! to break down the hidden costs involved when Americans go to sell their homes.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Nicholas Jacobino

Video Transcript

BRAD SMITH: Well, we already know that buying a house can cost a fortune nowadays, but it turns out selling can take a bite out of your wallet as well. Joining us now to break down the costs involved in selling a home is our very own Dani Romero. Dani, tell us the three big hidden costs for home sellers that we may not already be aware of.

DANI ROMERO: Selling a home can be really expensive, Brad. It's about 6% to 10% of the sale price. So for example, if you have a $400,000 home for sale, those costs could range about 24,000 to 40,000. And if you have equity, sellers pay costs out of those gains from the sale rather than up fronting the costs, which some sellers-- and now if some sellers don't have enough equity in the home, they will have to upfront that cash at closing time. But other costs to really consider, staging a home with, you know, nice furniture, that can cost you thousands or even hundreds of dollars, depending on the services that the stager is providing.

Another cost to really consider is repairs and upgrades. So depending on whether or not it's a seller's market or a buyer's market, the expectations can shift on whether or not you would have to please that buyer. So that could mean, you know, painting the house, adding more plants to the yard, making it look nice. So there's some costs there. Now title insurance, this is really important I thought, protects the homeowner and mortgage lender from financial losses in the transaction process. So as a seller you could be paying a premium, which could cost you a pretty penny at closing. And another thing to consider is settlement services. So some states require buyers and sellers to use an escrow or closing company to handle their transactions.

And in some states, those to handle that attorney's do it. So those fees can be about 1% to 2% of the sale price. So that could be split between the seller or the buyer. And then one other thing to just point out is transfer tax. Obviously, this depends on the state and local jurisdiction, but there is some form of tax when there's a change of ownership.

BRAD SMITH: Dani, while we have you, there was a National Association of Realtors settlement recently. How does that impact seller costs?

DANI ROMERO: The biggest cost for Sellers is paying for their realtors commission, so typically that's about 5% to 6% of the home's sales price. So for example, if you're selling a home for $400,000, a 5% commission would be about $20,000, but this structure could completely change after the National Association of Realtors settlement. The outcome hasn't been finalized, but it is possible that sellers could pay a lower commission. So you do have a lot more negotiating power over those commission fees, Brad.

BRAD SMITH: All right. Yahoo Finance's own Dani Romero just out there in the newsroom. Thanks so much for the time, Dani. Really appreciate the breakdown here.