Cost to Sell Home and Buy a New One

[guppy]

After posting recently about our car being stolen in front of our house on the street then stripped and left in an alleyway, I figured I would follow up to say that I appreciate all the posts and feedback I received. To be honest, I feel as it was partly our fault at this point. I've had two co-workers drive me home this week and they saw the towed civic sitting in our driveway and said "Oh, THAT's why it was stolen!". My husband enjoys cars and had taken the time to install a plastic lip on the front, an exhaust system, and meticulously painted all of the trim of the car to make it look a little newer/"cooler". He did all the things to entice someone from our downtown into thinking if he had made those upgrades, what else had he done under the hood? He now understands either it's best he leaves it completely stock, or if he is going to keep updating it's look, to keep it garaged. Thankfully our neighborhood is safe in that there's never been a break-in that anyone could remember. Not to say that there ever couldn't be, but after talking to some neighbors and giving things a little time, I now feel more comfortable staying here for probably another two years so our mortgage balance is low enough that we can make a little money on the sale of this home and afford one in the really nice nearby school district.

So as my follow up question (for most likely a while down the road, but I figure it doesn't hurt to ask now..) is how much does it cost to sell a home and then buy another one? Am I taking into account everything below?

- Realtor costs: In PA I think that runs 5%-6%. Do I need to pay all of that when I sell, or would the buyer pay half?

- Any cost to make improvements on the home to sell (Something I'll have to take into consideration since theres many small projects we need to do)

- Loss due to owing more than home is worth mortgage-wise (which would happen if we were to sell today)

- Closing costs on new home (I've read approx 3%?)

- Down payment for new home (20% or higher)

- Realtor costs (See above). If I only pay half to sell the home, I'm assuming I'd pay half when I buy the new one?

- Moving costs

To be honest, I should remember more from when we first bought this house, but I was in college and let my new husband handle all the finances at that point and he remembers sums of money he paid out but not what those costs were for anymore. Am I missing anything? Thanks in advance!!

[minnie1928]

- I'm aware of realtor costs. In PA I think that runs 5%-6%. Do I need to pay all of that when I sell, or would the buyer pay half?

- Any cost to make improvements on the home to sell

- Loss due to owing more than home is worth mortgage-wise (which would happen if we were to sell today)

- Closing costs on new home (I've read approx 3%?)

- Down payment for new home (20% or higher)

- Realtor costs (See above). If I only pay half to sell the home, I'm assuming I'd pay half when I buy the new one?

- Moving costs

1. PA Realtors fees run about 5-6%, but they can be negotiated too. You as the seller would pay all the realtor fees, but then you as a buyer would not pay any.
2. Costs to make improvements vary widely...it depends what shape your house is in and what shape you want it to be in to sell. For example, in my area in order to get a house to move quickly it needs to be in "model" condition. Since we might be selling soon we are having new carpets put in 2 rooms, cost $3000. Or, you could just need some paint work done for a few hundred.
3. Loss on the sale would need to be paid at settlement out of your own cash, unless you do a short sale and the bank agrees to release the deed for less than what you owe. There are credit score implications with this method and should not be taken lightly.
4. Closing costs in PA I think include a 1% transfer tax (may depend on the county, not sure if it's a county or state tax) that I think are paid by both seller and buyer.
5. Down payment is correct, you'll need 20% down at a minimum.
6. Buyer realtor costs = $0
7. Moving costs are another one that can vary widely depending on what you have, what you want them to do, how far to move, whether you buy boxes or get your own, etc. I'll give you our potential move as a worst case...if we move, we'll move from NJ to WA. For them to move me (I pack my own boxes) it will cost about $10,000. Now, at the opposite end of the scale I paid to move my mom from one apartment to another within the same town and it cost about $500 (she packed her own boxes).

[scfr]

In addition to what you've already listed, there is a possible major expense (sales tax) and lots of little incidental expenses that can rally add up.

Sales Tax: Some states require a seller to pay sales tax. I don't know about PA.
Staging Fee: If you decide to have your home staged, you'll have to pay the stager and may need to buy a few small things for them to use in the staging
Increased Energy Costs: Every time you have an open house or a showing, all the lights go on, the temperature probably goes up (or down depending on the season), music is played, etc. And I know this may sound trivial, but you will probably run your dishwasher more often (because you won't be able to leave a dirty dish in the sink ever, you'll run it when your dishwasher gets close to full rather than waiting for it to be 100% full).
"Out of the House" Costs: When you have to be out of the house for 5-6 hours because of an open house, what will you do? If you go to a movie, go out to eat, etc, that costs you.
Househunting Costs: Gas burned driving around, wear & tear on the car
Eating Out More Often?: You may find that you eat out more often than usual, not only because you will be shut out of your house during open houses and showings, but also because you will be very busy with keeping the house spotless and house hunting. And even when you eat at home, you may buy more "semi-processed foods" because you won't want to dirty too many pans & you won't want odors that might linger should someone call and tell you "I'm 5 minutes away with a client who wants to see your house."

When I calculate my home's value for my net worth statement, I deduct 8% for expected sales-related costs.

[minnie1928]

In addition to what you've already listed, there is a possible major expense (sales tax) and lots of little incidental expenses that can rally add up.

Sales Tax: Some states require a seller to pay sales tax. I don't know about PA.

PA doesn't charge sales tax on a home. I just moved from PA about 2.5 years ago. There is a 1% transfer tax, but I'm not sure if it's a state tax or a county tax. If county, then it might not apply to their situation.

All the other considerations that you listed we're good. I hadn't thought of it from that angle.

[jIM_Ohio]

1. PA Realtors fees run about 5-6%, but they can be negotiated too. You as the seller would pay all the realtor fees, but then you as a buyer would not pay any.
2. Costs to make improvements vary widely...it depends what shape your house is in and what shape you want it to be in to sell. For example, in my area in order to get a house to move quickly it needs to be in "model" condition. Since we might be selling soon we are having new carpets put in 2 rooms, cost $3000. Or, you could just need some paint work done for a few hundred.
3. Loss on the sale would need to be paid at settlement out of your own cash, unless you do a short sale and the bank agrees to release the deed for less than what you owe. There are credit score implications with this method and should not be taken lightly.
4. Closing costs in PA I think include a 1% transfer tax (may depend on the county, not sure if it's a county or state tax) that I think are paid by both seller and buyer.
5. Down payment is correct, you'll need 20% down at a minimum.
6. Buyer realtor costs = $0
7. Moving costs are another one that can vary widely depending on what you have, what you want them to do, how far to move, whether you buy boxes or get your own, etc. I'll give you our potential move as a worst case...if we move, we'll move from NJ to WA. For them to move me (I pack my own boxes) it will cost about $10,000. Now, at the opposite end of the scale I paid to move my mom from one apartment to another within the same town and it cost about $500 (she packed her own boxes).

+1
this is good info

You have two choices when you sell

Look for a new house to buy and sell house A, move out into house B immediately. This is stressful as coordinating schedules of 2 buyers and 2 sellers (even though one seller- you- is also one of the buyers) is challenging.

The alternative is sell house A, move into an apartment, then buy house B when you are ready. Lots of pluses- if you rent for less than you pay on mortgage now, you will accumulate cash for a down payment fast. IIRC you have 1 kid with 1 more on the way? If this is accurate (I don't keep all posters straight, so if I am wrong, sorry), then you need a 2 BR apt for maybe 12 months where you can save $500-$2000/mo and have a $24,000-$36,000 downpayment.

You would be better off putting negative equity on a credit card than doing a short sale.

[playtimeover]

In addition to what you've already listed, there is a possible major expense (sales tax) and lots of little incidental expenses that can rally add up.

Sales Tax: Some states require a seller to pay sales tax. I don't know about PA.
Staging Fee: If you decide to have your home staged, you'll have to pay the stager and may need to buy a few small things for them to use in the staging
Increased Energy Costs: Every time you have an open house or a showing, all the lights go on, the temperature probably goes up (or down depending on the season), music is played, etc. And I know this may sound trivial, but you will probably run your dishwasher more often (because you won't be able to leave a dirty dish in the sink ever, you'll run it when your dishwasher gets close to full rather than waiting for it to be 100% full).
"Out of the House" Costs: When you have to be out of the house for 5-6 hours because of an open house, what will you do? If you go to a movie, go out to eat, etc, that costs you.
Househunting Costs: Gas burned driving around, wear & tear on the car
Eating Out More Often?: You may find that you eat out more often than usual, not only because you will be shut out of your house during open houses and showings, but also because you will be very busy with keeping the house spotless and house hunting. And even when you eat at home, you may buy more "semi-processed foods" because you won't want to dirty too many pans & you won't want odors that might linger should someone call and tell you "I'm 5 minutes away with a client who wants to see your house."

When I calculate my home's value for my net worth statement, I deduct 8% for expected sales-related costs.

No addition information on what you've said. You 2 have already posted what's on my mind. Great information..

[cjscully]

- Realtor costs: In PA I think that runs 5%-6%. Do I need to pay all of that when I sell, or would the buyer pay half?

All real estate commissions are negotiable. You could also opt to market your house yourself. For Sale by Owner used to be much more difficult than it is today. However, with multiple websites available to list your property on and other avenues you can use to market, it's not as difficult as it used to be. The only cautionary word I would give you is that in my state (not sure about PA) there are certain disclosures and so forth that the seller must make to the buyer. You'd have to do your homework and make sure you have a grip on that stuff. Of course there are costs to marketing your house yourself but they're unlikely to be 5-6% of the sale price.

- Any cost to make improvements on the home to sell (Something I'll have to take into consideration since theres many small projects we need to do)

Yes. Do as much of the work yourselves as you can. There's another angle you need to consider on this. If you accept an offer from a buyer who is seeking FHA or VA funding you may have more repairs if there is anything about the property that does not meet FHA or VA property standards.

- Loss due to owing more than home is worth mortgage-wise (which would happen if we were to sell today)

- Closing costs on new home (I've read approx 3%?)

If you happen to find a really motivated seller you could get the seller to pay some or all of your closing costs. In this market that is very common. (You'll probably receive offers from buyers wanting you to cover closing costs too BTW.)

- Down payment for new home (20% or higher)

Check.

- Realtor costs (See above). If I only pay half to sell the home, I'm assuming I'd pay half when I buy the new one?

Not necessarily. See above