Everyone knows that selling a home is expensive, but few homeowners take the time to look beyond their agent’s commission to all the “hidden costs” of a traditional listing.
These are the 7 most common costs to keep in mind before you list your home:
1. Seller Concessions (up to 3%)
Home buyers often ask the seller to help pay for costs associated with their purchase. These seller concessions are one of the most expensive “hidden costs”.
Buyers commonly ask for sellers to contribute towards their closing costs, mortgage application fees, or to provide down payment assistance.
For instance, over 60% of Arizona home sellers give concessions to their buyer. They usually range from 2% to 3%, but we have seen them as high as 5%.
Note: Opendoor pays our full portion of closing costs, and all of our financing costs when we make an offer. There are no hidden “concessions”.
2. Low Appraisals (up to 5%)
Imagine you’ve signed with a buyer to sell your home. It’s a great price, you’re feeling good, your new home is all lined up, and you’re ready to move!
Then your home appraises for below the sale price. ?
The first thing you should try is an appraisal rebuttal. A knowledgable agent can help you through this. Unfortunately, rebutting an appraisal usually won’t help much. So what can you do next?
You’ll want to negotiate with the buyer for one for one of the following (from best to worst):
- The buyer makes up the price difference in cash. If the appraisal is close, you may be able to get the buyer to come to the table with more cash. In our experience, this rarely works because most people buy the nicest home they can afford.
- You and the buyer split the difference. If your buyer has more money available than they needed for the down payment, this is a great option. Unfortunately, many buyers don’t have that cash on hand and are already putting as much as they can into the down payment.
- You eat the price difference. Appraisals vary by more than 5%, so this could be a big chunk out of your pocket. We’ve experienced this issue ourselves when reselling some homes we’ve purchased, and there was nothing we could do about it.
- You lose the contract with your buyer and re-list your home. For big appraisal differences, this is the best option. It doesn’t guarantee the next buyer will lead to a better appraisal, but you have a chance. Unfortunately if you were expecting to buy a home, you may need to walk away.
Note: A home offer from Opendoor means certainty. Since we buy your home in cash, there’s no appraisal to derail your sale (or hit your bank account). Once your home is inspected, you know exactly when and for how much you’re going to close.
3. Closing Costs (1%)
Closing costs are the most well-known “hidden cost” of selling your home. You’ll owe them in every transaction, regardless of whether you’re using an agent, selling by owner, or selling to Opendoor.
“Closing cost” is a catch-all phrase, but usually refers to title insurance and the escrow fee charged by a title company. They may also include HOA transfer fees, unpaid property taxes, and other government fees.
4. Contractors and Repair Credits (1% to 5%)
Unless you’re selling “as-is” (which signals to the market that your home is a fixer-upper), you’ll probably be asked by your buyer to make repairs based on their inspection report.
Across the thousands of homes we’ve sold at Opendoor, we’ve seen repair asks ranging from a few hundred dollars for touch ups, to over $15,000 for foundation cracks, roof repairs, or resurfacing a pool.
Most buyers will ask you to either fix them yourself or credit them the expected cost of making the repairs out of the sale price of the home. 1% to 5% in repair asks are common, but it obviously depends on the upkeep of your home and the work put into it to get sale-ready.
Note: Opendoor never requires you to pay cash out of pocket to make repairs. If there are non-trivial issues, we’ll ask for credits for our projected repair costs. You save money because we pass along our wholesale price savings to you.
5. The Multi-Stage Move (up to 1.5%)
One of the most stressful parts of selling your home is lining up timelines to move. Most people need to sell their home before they can buy a home because of the cash needed for a down payment, or credit requirements by your bank. But what do they do in the time in between selling and buying?
Common solutions include:
- Putting everything in storage for a few months.
- Moving into a short-term rental while you find your dream home.
- Staying at a hotel.
- Leasing back your home from the new buyer after the sale.
- Temporarily living at a relative or friend’s place.
These options have two things in common: they’re annoying and expensive!
Note: With your Opendoor cash offer, you can choose your closing date. That means you can avoid that “multi-stage move” and save thousands of dollars. If you need a few extra days, Opendoor has a “Late Checkout” program that lets you close your sale and get paid before you move out.
6. Holding Costs (up to 3%)
Not doing a multi-stage move because you already moved into another home? Is your old home vacant?
Unfortunately, you’re still paying holding costs on your old home during the time you’re selling, such as property taxes, HOA fees, mortgage interest, insurance and anything else that comes up. It all adds up over the 90+ days many sales take to close.
Note: In an Opendoor sale, we buy your home as soon as you’re ready to sell. While we own your home during resale, we’ll be paying these costs ourselves.
7. Cleaning and Staging (up to 1%)
During your listing, you’ll need to keep your home clean and “show ready”, which can cost up to $100 per week. If your home is vacant, you may want to stage it with furniture from a staging company to make it more appealing to buyers. All in, staging costs around 1% of a typical home’s value.
Note: When you sell to Opendoor you don’t pay anything for cleaning or staging because we do all of that (and more) for you when we re-list your home.
The Bottom Line
Selling a home can cost a lot of money. At Opendoor, we’ve worked really hard to give you the most money possible along with full control over your home sale.
You’ll know exactly how much cash you’ll end up with, and your moving timeline is in your hands. Get an offer on your home today at Opendoor.com. It’s free, with no obligation to accept.