Get updates delivered to you daily. Free and customizable.
Fortune
Selling a home is expensive, too. Homeowners spend $55,000 on average to sell their properties
By Sydney Lake,
9 days ago
Americans report spending nearly $55,000 on home-selling expenses for a median-priced home.
Photo illustration by Fortune; original photo by Getty Images
Considering how high both mortgage rates and home prices have gotten, buying a home is more expensive than ever before. But it’s not just buyers who are hurting in the homebuying process—sellers dole out tens of thousands of dollars on the transaction, too.
Americans report spending nearly $55,000 on home-selling expenses for a median-priced home, and 40% of that figure represents commissions paid to realtors. Other expenses include repairs, improvements, renovations, closing costs, concessions, moving costs, marketing, and signage, according to a report released on Monday by Clever Real Estate, a platform that connects buyers and sellers with real estate agents.
The total cost surprised 64% of sellers—and had they known the true cost of selling their home, 89% of them would have made a different decision. The report is based on a survey of more than 1,000 Americans who sold a home between 2022 and 2024.
“Home values have increased at a cadence that has outpaced wages year-over-year for too long. Yet, despite this, the seller of a home is still expected to pay a 2%-to-3% commission to both the listing agent and the selling agent,” Christopher M. Naghibi, executive vice president and chief operating officer of First Foundation Bank, tells Fortune. While take-home commissions are rising due to increasing home prices, realtors’ amount of work hasn’t necessarily increased. “This nuance is lost on many sellers until they sell their first property, but that has been the practice for decades.” Naghibi is also a real estate broker and owns his own brokerage.
Indeed, some of the largest costs associated with selling a home include the listing-and-buyer agents’ commissions, which average between $10,000 and $11,000, according to the Clever Real Estate study. Other top costs include repairs, improvements, and renovations, which total $10,000 on average; closing costs, which set sellers back $8,000; and concessions to the buyer, which cost about $7,200.
“The real estate commissions are the price you pay to have a professional manage your transaction—just like a lawyer if you’re being sued or a dentist if you have a toothache,”
Melinda Gunther, a global adviser with Premier Sotheby’s International Realty, tells Fortune. “If they didn’t like the service they received, that’s one thing, but to expect someone to manage your sale for free professionally is not realistic.”
How the NAR settlement could change the cost of having a realtor
What this means for homeowners and prospective buyers is that a change in commission structure is possible. That could be particularly helpful for sellers.
“By far and away the most expensive aspect of selling a home is paying for both the listing agent and selling agents’ commissions,” Naghibi says. “Both of those fees are paid by the seller.”
However, changes to commission structures could cost-burden buyers instead, Amanda Orson, founder of off-market property marketplace Galleon, tells Fortune.
“The NAR [settlement], which may lead to changes in how commissions are structured, could potentially shift more of the cost burden to buyers,” Orson says. “This might alleviate some costs for sellers, but will require both buyers and sellers to be more informed and prepared for these financial dynamics.”
Because of this, Orson encourages buyers to understand the commission structure before signing a buyer’s agent agreement. Orson’s company takes the agent out of the home-buying equation, allowing buyers and sellers to connect directly for the transaction. She equates Galleon with Expedia, which “made travel booking easier,” and Robinhood, which “simplified stock trading,” by making it easier for “experienced buyers to navigate the home buying process autonomously, efficiently, and cost-effectively,” Orson says.
It’s not surprising for real estate veterans that the market is turning this way. Over time, Naghibi has seen technology give consumers more access to the tools necessary to understand their local real estate market and list their own property.
“These were tasks that were historically a significant part of a real estate agent’s job,” Naghibi says. “A good real estate agent is incredibly valuable, but as home values have risen, so have their respective commissions.”
Subscribe to the Fortune Next to Lead newsletter to get weekly strategies on how to make it to the corner office. Sign up for free before it launches on June 24, 2024.
Get updates delivered to you daily. Free and customizable.
Welcome to NewsBreak, an open platform where diverse perspectives converge. Most of our content comes from established publications and journalists, as well as from our extensive network of tens of thousands of creators who contribute to our platform. We empower individuals to share insightful viewpoints through short posts and comments. It’s essential to note our commitment to transparency: our Terms of Use acknowledge that our services may not always be error-free, and our Community Standards emphasize our discretion in enforcing policies. We strive to foster a dynamic environment for free expression and robust discourse through safety guardrails of human and AI moderation. Join us in shaping the news narrative together.
Comments / 0