Real estate agent commissions are typically the largest expense when selling a house. Traditional commissions total 5-6% of the sale price, historically split between the listing agent (who represents you) and the buyer's agent.

How Commission Is Calculated

Recent Changes to Real Estate Commissions

The 2024 NAR settlement brought significant changes to how real estate commissions work. Key changes include:

• Buyer agent compensation is no longer automatically offered through the MLS
• Buyers may negotiate their agent's fee directly
• Sellers can still offer buyer agent compensation, but it is now a negotiation point
• Written buyer agreements are required before agents can show homes

These changes may shift some commission costs from sellers to buyers, though the market is still adjusting to new norms.

Can You Negotiate Commission?

Yes, real estate commissions are negotiable. Strategies to potentially reduce commission include:

• Interview multiple agents: Some agents offer competitive rates
• Consider discount brokerages: Flat-fee or reduced-commission services exist
• Negotiate based on price: Higher-priced homes may warrant lower percentages
• Bundle services: If buying and selling with the same agent, negotiate a package deal

Remember that lower commission may mean less marketing investment or agent attention. The cheapest agent is not always the best value.

Closing costs are fees paid to complete the real estate transaction. Sellers typically pay 1-3% of the sale price in closing costs, separate from agent commissions.

Common Seller Closing Costs

• Title insurance: $1,000-$4,000 depending on sale price and location. Protects the buyer and lender against title defects.
• Title search and examination: $300-$600 to verify clear ownership.
• Transfer taxes: Vary widely by state and locality. Some areas charge 1-2% of sale price; others have no transfer tax.
• Recording fees: $50-$250 to record the deed with the county.
• Attorney fees: $500-$1,500 in states requiring attorney involvement.
• Escrow fees: $500-$2,000 split between buyer and seller.
• Prorated property taxes: You reimburse any taxes you owe through closing date.
• HOA fees: Prorated fees plus transfer fees (if applicable).
• Mortgage payoff: Outstanding loan balance plus any prepayment penalties.

Closing Cost Example

Seller Concessions

Buyers sometimes request seller concessions, contributions toward their closing costs. While not required, seller concessions are a common negotiating tool, especially for buyers with limited cash reserves.

Typical seller concession limits by loan type:

• Conventional loans: 3-9% depending on down payment
• FHA loans: Up to 6%
• VA loans: Up to 4%

Preparing your home for sale requires investment, but strategic spending often pays for itself through faster sales and higher offers. Budget 1-2% of your expected sale price for preparation costs.

Pre-Listing Repairs

Address obvious issues before listing to avoid problems during buyer inspections:

• Minor repairs: $500-$2,000 for patching holes, fixing leaks, replacing broken fixtures
• Interior painting: $1,000-$3,000 for neutral colors throughout
• Flooring repairs: $500-$2,000 for carpet cleaning or hardwood refinishing
• HVAC service: $100-$300 for cleaning and inspection
• Roof repairs: $300-$1,000 for minor repairs (major issues may need disclosure)

Deep Cleaning

Professional deep cleaning costs $200-$500 and makes a significant impression on buyers. Include:

• Window cleaning (inside and out)
• Carpet steam cleaning
• Kitchen and bathroom deep clean
• Baseboard and fixture cleaning

Staging Costs

Staged homes sell faster and for more money. Your options:

• DIY staging: $200-$500 for accessories and updates
• Consultation only: $300-$600 for professional advice
• Full staging: $1,500-$4,000 including furniture rental
• Vacant home staging: $2,000-$6,000 to furnish empty spaces

Curb Appeal Improvements

• Landscaping: $500-$2,000 for cleanup, mulch, and flowers
• Pressure washing: $200-$500 for driveway, walkways, and siding
• Front door update: $100-$500 for paint or new hardware
• Exterior painting: $2,000-$5,000 for full exterior (if needed)

Most marketing costs are covered by your listing agent's commission. However, if selling FSBO or wanting enhanced marketing, you may incur additional expenses.

Typically Included with Agent Services

• Professional photography
• MLS listing
• Syndication to Zillow, Realtor.com, etc.
• Yard sign and lockbox
• Open house hosting
• Marketing materials

Optional Marketing Upgrades

• Drone photography: $150-$400 for aerial shots
• 3D virtual tour: $200-$500 for Matterport-style tours
• Video walkthrough: $200-$600 for professional video
• Premium online placement: $50-$300 per month
• Social media advertising: $100-$500

FSBO Marketing Costs

If selling without an agent, budget for:

• Flat-fee MLS listing: $300-$500
• Professional photography: $150-$300
• FSBO yard sign: $30-$100
• Online listing fees: $0-$200 depending on platforms

Some sellers order a pre-listing inspection to identify issues before buyers do. This proactive approach costs $300-$500 but offers several benefits:

• Discover problems you can fix before listing
• Avoid surprises that derail deals during buyer inspections
• Price your home more accurately
• Demonstrate transparency to buyers
• Reduce negotiation leverage for buyers

Whether a pre-listing inspection makes sense depends on your home's age, condition, and your confidence in its systems. For older homes or properties you have not maintained closely, the investment often pays off.

If you have a mortgage, the outstanding balance is paid off at closing from your sale proceeds. Several factors affect your payoff amount:

Calculating Your Payoff

• Current balance: Your remaining principal balance
• Accrued interest: Interest from last payment to closing date
• Prepayment penalty: Some loans charge penalties for early payoff (rare today)
• Outstanding fees: Any late fees or escrow shortages

Request a payoff statement from your lender before listing to know exactly what you owe. Payoff amounts are typically valid for 10-30 days.

Home Equity Lines of Credit (HELOCs)

If you have a HELOC or second mortgage, that balance must also be paid at closing. Contact all lienholders for payoff amounts. If your total mortgage debt exceeds your expected net proceeds, you may face a short sale situation requiring lender approval.

Moving costs often get overlooked when budgeting for a home sale. Whether moving across town or across the country, these expenses add up.

Local Moving Costs

• Professional movers: $500-$2,000 for local moves
• DIY rental truck: $100-$300 plus fuel
• Packing supplies: $50-$200
• Storage unit: $100-$300/month if needed temporarily

Long-Distance Moving Costs

• Professional movers: $2,000-$8,000+ depending on distance and volume
• Portable containers: $1,500-$5,000
• Vehicle shipping: $500-$1,500 per vehicle

Other Moving-Related Costs

• Utility connection fees at new home
• Address change and mail forwarding
• New driver's licenses and vehicle registration
• Temporary housing if timing does not align

Selling your home may trigger capital gains taxes on your profit, though most homeowners qualify for significant exclusions.

Primary Residence Exclusion

Under IRS Section 121, you can exclude capital gains from the sale of your primary residence:

• Single filers: Up to $250,000 in gains excluded
• Married filing jointly: Up to $500,000 in gains excluded

To qualify, you must have owned and lived in the home as your primary residence for at least 2 of the 5 years before selling. You can only use this exclusion once every 2 years.

Calculating Capital Gains

When You May Owe Taxes

• Profit exceeds exclusion limits
• You have not lived in the home 2 of the past 5 years
• Selling an investment or rental property
• Selling an inherited property

Always consult a tax professional for your specific situation, especially if selling investment property or expecting gains above exclusion limits.

Your net proceeds represent the actual money you walk away with after all expenses. Here is how to calculate:

Ask your real estate agent for a net sheet showing estimated proceeds based on your specific situation. This helps set realistic expectations for your sale.

While some costs are unavoidable, you can take steps to minimize expenses:

• Negotiate commission: Interview multiple agents and discuss competitive rates
• Consider flat-fee or discount brokerages: May save thousands in commission
• Sell FSBO: Eliminate listing agent commission (but consider the tradeoffs)
• DIY repairs and staging: Do what you can yourself
• Time your sale: Selling in peak season may net higher prices
• Compare title companies: Get quotes from multiple providers
• Minimize seller concessions: Only offer what is necessary to close

Balance cost savings against potential impacts on your sale price and timeline. Cutting corners in the wrong places can cost more than you save.

For a complete overview of the selling process, see our guide on how to sell a house.