Home sellers are likely spending almost $21,000 in additional costs to sell their homes, according to an analysis by Zillow and Thumbtack. These costs include prep activities like painting and staging the home for sale.
The analysis revealed that these costs come as an unwelcome surprise for almost half the sellers who are doing this activity for the first time. It indicated that almost 79 percent of sellers completed at least one home improvement project before putting their property on the market.
"Selling is often a complicated process that can sometimes require extensive prep work in order to put your best foot forward for a successful sale," said Skylar Olsen, Director of Economic Research at Zillow. "It also comes with huge transaction costs that aren't necessarily top of mind to someone who hasn't sold a home in a while or never has had the pleasure. Selling was hard even in the sellers' market of recent years, and it's going to get harder as markets soften."
One of the key costs that home sellers need to budget for are closing costs. The analysis revealed that these expenses, which include agent commissions and transfers or sales tax, could add up to $14,281, on average, but because they are based on the home's sale price, sellers in the nation's priciest markets pay much more. For example, in San Jose sellers pay $76,015 on average in closing costs, the highest of metros analyzed. By comparison, sellers in Cleveland spend the least at $9,046.
Additionally, sellers who hire professional help for common home prep projects tend to spend, approximately $6,570 on improvements like interior and exterior painting, staging, and carpet cleaning, as well as local moving costs to their new home, the analysis indicated.
And while these costs may initially pinch the homeowners' pockets, the analysis found that sellers who made these improvements were more likely to sell at a higher rate than the asking price compared with those who didn't.
"While the costs of these touch-up projects can add up, particularly in high cost of living metros, sellers should remember that by taking care of these projects, they can get a really strong return on their investment and may be more likely to sell their home for the highest possible price," said Lucas Puente, Economist at Thumbtack.