Watch Out, Wallet
Just as smart homeowners pad their budgets when undertaking renovations, they should do the same when it's time to put their house on the market. Zillow and Thumbtack released a joint study that shows just how much is spent in "hidden costs" during a home's sale, and the results for residents of major Texas cities are pretty hefty.
What's considered a hidden cost, by these two sites' definition? Closing costs and what you spend to get your home in sale-ready condition, including things such as painting, staging, house and carpet cleaning, lawn care and gardening, and local moving costs, plus all the labor if you don't do the work yourself.
"Even in the hottest housing markets in the country, selling a home takes time and costs money," says Jeremy Wacksman, Zillow's chief marketing officer. "From decluttering and staging to pre-inspections, agents and homeowners often spend months behind the scenes prepping a home — well before it's listed on the market. If you're planning to sell this year, try to take some time to research what costs you may be responsible for and how they could affect your profit or even budget for your next house."
Nationally, homeowners spend an average of $18,342 to sell their home. In Dallas-Fort Worth, it's only $16,986. That's because DFW boasts the cheapest prep prices in the entire study at $3,720 — well below the U.S. average of nearly five grand. And with a median home ringing up at $221,100, and its corresponding closing costs tallying only about $13,266, that helps the lower number make sense.
Houston's numbers are similar, with costs totaling $15,904. But in Austin, the hidden costs are a whopping $21,450. That large sum is largely due to ATX's pricey closing costs, the highest of any Texas city included in the report. A seller there can expect to shell out around $16,890 for agent commissions and transfer or sales taxes, which are a percentage of the home's sales price. Since the median cost of an Austin home is currently $281,500, that explains the sticker shock.
The lowest hidden costs in Texas can be found in San Antonio, where sellers tend to spend $14,808 without really realizing it. While Alamo City's estimated closing costs are also the lowest in the Lone Star State, the amount that owners spend to get their homes in top condition is not: $4,650, which is second only to Houston's $4,690.
Zillow and Thumbtack point out that around 61 percent of today's sellers have never sold a home before, but that 78 percent say they made at least one improvement before listing.
In San Jose, California, deep-pocketed sellers are fixing things up to the tune of $6,580 and paying a whopping $74,927 in closing costs (the median home price there is $1.2 million). The resulting $81,507 in hidden costs looks especially high when compared to those of St. Louis, which come in at $13,010 overall.
“While there could be some initial sticker shock associated with the costs of selling a home, investing in home improvement projects like painting and home staging often proves to be very valuable in the long run," says Thumbtack economist Lucas Puente. "Homeowners starting to think about selling should take time to research and budget for the projects that can ultimately help sell their home faster and at a higher value."