What Are Selling Costs?
Selling Costs are (you guessed it!) costs you incur when you sell your property. A bulk of your selling costs will be for agent's commissions, but there are also other miscellaneous closing costs to consider as well.
What Are Typical Selling Costs & Amounts?
Typical Selling Costs
Here's a list of typical Selling Costs and average amounts that you will likely have on your rehab projects.
- Buyer's Agent Commission (~3% of Sales Price) - Seller's generally pay the buyer's agents commissions which are typically 3% of the Sales Price.
- Seller's Agent Commission (~3% of Sales Price) - The Seller is also responsible for paying for their Seller Agent's commission as well. Now, if you list the property FSBO or are a Real Estate Agent yourself, then you could potentially save 3% on the sales commission.
- Seller Assisted Closing Costs - In a buyer's market, buyer's may ask the seller to pay some or all of their closing costs. However, in today's seller's market, you will likely not have to pay any of the buyer's closing costs.
- Transfer Taxes/Excise Taxes - Some States impose Transfer Taxes or Excise Taxes on real estate transactions, so check to see if these taxes are required in your area.
- Home Warranty ($400 to 500) - Generally, home buyers expect the seller to purchase a Home Warranty that covers repair or replacement of appliances, systems or components of the home for a 1-year period.
- Termite Letter ($50 - 100) - Many buyers (and their lenders) also require proof of a termite inspection.
<span class="lesson-quote--tag blue">PRO TIP</span>
<p>Generally, Selling Costs Will Be Around 7 To 9% Of The Sales Price.</p>
Selling Costs Example
Let's run through an example project to show you how to calculate Selling Costs.
In this example, the property is a 1,500 sf, 3 bedroom, 2 bathroom house that a rehabber is planning on reselling for $200,000.
Below is a breakdown of typical Selling Cost Amounts and Totals.
<table id="costs"> <tbody><tr> <th style="width: 50%;">Selling Costs</th> <th style="width: 25%;"></th> <th style="width: 25%;">Amount</th> </tr> <tr> <td>Seller's Agent Commissions 3% of Resale</td> <td></td> <td>$6,000</td> </tr> <tr> <td>Buyer's Agent Commissions 3% of Resale</td> <td></td> <td>$6,000</td> </tr> <tr> <td>Miscellaneous Closing Costs 1% of Resale</td> <td></td> <td>$2,000</td> </tr> <tr> <td>Home Warranty</td> <td></td> <td>$450</td> </tr> <tr> <td>Termite Letter</td> <td></td> <td>$75</td> </tr><tr style="border-top: 3px double black;"> <td>Total Selling Costs</td> <td></td> <td><strong>$14,525</strong></td> </tr> </tbody></table>
In our Example, the Selling Costs amount to $14,525 on a $200,000 rehab, which is approximately 7.5% of the Resale Value
House Flipping Calculator
To analyze your deals efficiently and systematically you may want to consider building your own deal analysis spreadsheet or utilizing a pre-built software like our Flipper Force software.
Our Flipper Force software has a House Flipping Calculator tool that is pre-built with a step-by-step process to help you can calculate your Buying Costs, Holding Costs, Selling Costs & Financing Costs for your projects.
Having a system in place will ensure that you don't miss any costly items in your analysis so you make the right offer for your property!
Learn more about our House Flipping Calculator