The Havasu real estate market is hot right now. Low inventory helps keep prices up. It definitely favors sellers. However, before you start counting how much dough you plan on raking in, consider the costs involved with actually selling your Lake Havasu home. If you depend on receiving a certain amount of money in order to qualify for your next home, you might be disappointed when it ends up several thousand less due to the unavoidable expenses involved with selling it. To avoid any “surprises”, read on to learn about the various costs involved in selling your Havasu home.
Real Costs for Home Sellers
This one’s obvious. We must pay the people that represent both sides of a sale. You don’t work for free. Neither do they. Usually, this runs about 6% of the sale price. On a $250,000 sale, that comes to $15,000. That is split between the buyer’s agent and the seller’s agent. The commission check comes from the seller at closing. But before you start to stress out, that cost usually gets factored into what you sell your home for. So, it’s not necessarily an “out of pocket” fee. But it does affect the amount of profit you see.
You’ve most likely heard the term “closing costs” before. You paid them when you bought your real estate in Lake Havasu. As a seller, your closing costs include the real estate commissions, half of the escrow fees (split with the buyer), any property taxes and HOA fees due up until the date of sale, document fees, and utility costs due. After commissions, the seller’s closing costs run about 1% to 2% of the sale price on average.
Sometimes, we forget to factor in the cost of moving from one home to another when considering expenses. Some of these can be managed to a degree. If you simply move from one home in Havasu to another in the same city, rent a truck and seek out help with your friends and family. However, a move out of the area or if you are of limited mobility, you might need to hire a moving company to take care of things for you. This ends up costing considerably more. Do your research ahead of time. Check out different moving companies. Make sure they are insured. Check their references. The sooner you do this, the sooner you’ll know what to expect to pay.
While commissions, closing costs, and moving expenses are usually things that sellers expect to pay, some other “hidden” costs come up that they don’t consider. For example, did you make any renovations or repairs to your home in Lake Havasu to get it ready to sell on the market? Even if you did some minor updating (paint, change out cabinet pulls, fixed squeaky hinges, etc.), these costs add up. What about home staging? Did you hire a professional photographer to take pictures of your home for marketing purposes? Since you probably paid these expenses upfront, you might not factor them into the cost of selling your home.
Capital Gains Tax
Finally, don’t forget Uncle Sam’s cut. He certainly won’t forget about it. When you sell your real estate in Lake Havasu, the profit you receive is considered “capital gains”. To the IRS, that translates to taxable income in the form of a capital gains tax. This can amount to as much as 20% of your profits. However, you might be eligible for a capital gains tax exemption. You must have used the home as your primary residence for at least two of the last five years. Plus, you cannot have used the exemption in a home sale for at least two years prior to the current home sale. If you meet these requirements, you are exempt from paying taxes on the first $250,000 of profit (for individuals) or $500,000 of profit (for married, filing jointly). For more information about the capital gains tax exemption, please contact your tax advisor.
Alexis Steel – 928-303-2199
Keller Williams Arizona Living Realty
Search homes at www.TheHavasuHome.com