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.
FAQ
Well, DUH....But 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.
PRO TIP
Generally, Selling Costs will be around 6 to 8% of the Sales price.
What Do Real Flippers Budget for Selling Costs?
Many courses still teach 8% to 10% of ARV for selling costs. The real numbers from 22,524 deals analyzed in FlipperForce come in lower, though they have been creeping back up.
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.
Selling Costs
Amount
Seller's Agent Commissions 3% of Resale
$6,000
Buyer's Agent Commissions 3% of Resale
$6,000
Seller Assisted Closing Costs
$2,000
Home Warranty
$450
Termite Letter
$75
Total Selling Costs
$14,525
In our Example, the Selling Costs amount to $14,525 on a $200,000 rehab, which is approximately 7.5% of the Resale Value
Know Your Max Offer Before You Make It
The FlipperForce House Flipping Calculator walks you step-by-step through every cost in your deal: buying, rehab, holding, financing, and selling. In minutes, you'll know your projected profit and the most you can pay for the property. No more napkin math, no more missed costs, no more overpaying.
