7 Hidden Costs of Selling Your NYC Home
Between making the house market-ready, closing costs, other real estate taxes, and relocation expenses, novice sellers may be shocked by the bite home selling can take out of their wallets. Obviously, the picture isn’t all rosy, and any home-selling journey is a lengthy and pricy one. But being prepared for all the financial bites that might ensue is half the battle. That said, let’s break down seven hidden costs of selling your NYC home!
1. Preparing your NYC home for the market
As a property owner, making the decision to sell is the most significant step in the process. But even after you’ve made up your mind, there is still plenty of work to do when selling your NYC home.
- Home improvements. Before listing your property, consider having a pre-inspection so you can be aware of what issues you need to address. The costs associated with property repairs can be all over the place, depending on whether you have let your home’s maintenance lapse. If in poor condition, hiring a handyman or a general contractor is crucial to getting your property market-ready. A home inspection isn’t just due diligence, so this may not be the time to cut corners. If you cheap out, you risk buyers catching shoddy repairs, and you might end up shelling out more cash than if you had used a skilled handyman the first time.
- Landscaping is a tried-and-true method of increasing the value of your property and attracting more buyers. There’s no need to break the bank, however. Mowing the lawn, trimming the trees, pruning shrubs, removing dead foliage, pulling out the unsightly weeds, and planting a few flowering plants here and there to fill in empty spaces will do the trick.
- A less-than-clean home is a red flag for many buyers and can end up costing you thousands off the sale price. Nothing is off-limits to the buyers who need to decide if your home will meet their needs. They will open the closets, scout around every nook and cranny, and may even shift furniture. In light of this, hiring a cleaning crew before your first open house is a great way to get the job done thoroughly. Pack all that you don’t want them to see into moving boxes and store somewhere.
2. Professional staging and jaw-dropping visuals
While some sellers tend to be hesitant to invest in staging, studies show this is a powerful selling tool. So, how much is hiring a professional to stage your home going to set you back? This depends on the size of your property and how much work needs to be done. Generally, however, you can expect an initial consultation to cost $300 to $600, then $500 to $600 per month per room, with a three-month contract minimum. Following the staging comes professional photography that will make your listing look out of this world. Quality, however, doesn’t come cheap.
3. Independent appraisal
A qualified appraiser, an unbiased third party, will examine your home from top to bottom and provide its estimated value based on a visual inspection of the home’s condition, location, and features. Arriving at the right price is the crucial component of any purchase-and-sale transactions transaction. You need to find out how much your home would sell for. This is because the transaction can be delayed or even canceled if the appraisal value is lower than the agreed-upon sale price.
4. Home seller concessions
Receiving the perfect offer is exceedingly rare. You will hardly get the chance to close the deal without making some sort of trade-off with the buyer. For starters, buyers not only need to know what they are buying but also want to get the most value for their money. So, they rarely neglect the benefits a home inspection report can have for their bottom line. Unless the report comes back perfect, it is not uncommon for buyers to request further repairs from sellers as a condition of the deal or sellers to lower their sale price so buyers can make the repairs themselves.
Of course, you can try to negotiate home fixes by offering to cover the home warranty cost. Although you may be able to sweeten the deal this way and make your home stand out from others on the market, this may turn out to be another one of the hidden costs of selling your NYC home.
5. Vacating the home
One more type of expense that doesn’t first come to mind when selling your NYC property is moving-related.
The costs related to vacating your home include temporary housing, utilities, moving costs, and homeowner’s insurance for vacant property.
- Temporary housing. Are you selling your home and buying another at the same time? Unless you commit to doing double-duty as both seller and buyer and time the transactions perfectly, you’re likely to have an overlap of about a month and a half in between. In this time frame, you’ll still be paying your existing mortgage, as well as alternative housing costs.
- Even if they’ve already moved into their new home, the majority of sellers leave their utilities on while their property is on the market for open houses and showings.
- Moving costs. The expenses of moving house in NYC can vary dramatically. It depends on the movers you hire, how many belongings you have, and how far away you are moving them. Luckily, Manhattan-based professionals are easy to find and skilled at getting your belongings from point A to point B safe and sound, but you’ll need a budget for this as well.
- Homeowners insurance for vacant property. Owning a vacant property comes with special risks. This is why you’ll need to add a rider to cover the period while it is on the market.
6. Closing costs
On the day of your closing, you’ll pay a number of fees to complete the real estate transaction. Though these are traditionally evenly split between the buyer and the seller, costs incurred typically reach 8% to 10% of the sale price for sellers, according to Zillow. So, what closing costs do sellers pay? Besides agent commission, NYC & New York State transfer taxes, title insurance, escrow fees, prorated property taxes, HOA fees, and attorney fees.
7. Real estate fees are the most typical hidden costs of selling your NYC home
Once the closing costs are settled, what remains is still not all profit. The final item on our list of hidden costs of selling your NYC home includes real estate fees, such as the outstanding mortgage balance and capital gains tax. For starters, if you have a mortgage on your home, part of your closing costs will go towards paying off the balance of your mortgage (prorated to the date of sale) and perhaps even a prepayment penalty. People often overlook the capital gains tax – at least until tax time. If you are selling your primary residence, have lived there for at least 2 years, you’ll get a tax break on the profit you make on the sale, up to $250,000 (if single), or $500,000 (if married and filing jointly).