Here’s How Much It Really Costs to Sell Your Home

Ever wonder how much it really costs to sell a home? A recent study shows that it’s probably more than you think.

There are a number of reasons economists caution not to think of your home as an investment, even if it feels and behaves like one at times. Chief among their reasons are liquidity and fees.

Unlike trading a share of stock, it’s a pretty huge ordeal to sell a house; it’s not a liquid asset. In the 2007-2009 financial crisis, the U.S. stock market and national home values both dropped more than 40%—but at least you could still unload your sharply discounted stocks if you needed your cash back. Meanwhile, millions of homeowners were trapped underwater on their mortgages and therefore unable to sell their biggest investment, even if they could somehow find a buyer.

And in the investing world, the single best predictor of returns is quite simple: lower fees generally yield better results. That’s because the high fees charged by some mutual funds and other investments eat directly into your returns, putting you at a disadvantage from the get-go.

But selling a home is one of the most fee-ridden transactions you can imagine.

In fact, a recent analysis by Zillow and Thumbtack found that homeowners spend $15,100 in fees to sell a median-priced $196,500 home. That amounts to a 7.7% fee — meaning you’d need your home to increase in value by 8% or more just to break even or eke out a small profit.

Among the obscured fees Zillow considered were real estate agent commissions, which can average about 5% to 6% of a sale (although discount brokers like Redfin are bringing that down), local taxes and transfer fees, and last-minute curb appeal improvements like painting or staging.

Not surprisingly, those fees are a lot higher in more costly metro areas, where the cost of living drives up the price of home improvement projects and higher home values ensure bigger realtor commission checks and juicier tax bills.

Homeowners in Boston and Washington, D.C., can expect to pay almost $30,000 to sell a median-priced home, for example. In Seattle, it costs $37,629 to sell a house, and in Los Angeles you’re looking at more than $40,000.

In San Francisco, where the median home price was $843,200 in March, the average seller pays a whopping $55,105 in commissions, closing costs, and home prep. And those figures don’t even account for other costs associated with selling a home, such as hiring movers.

Sellers in Indianapolis, where there’s no state transfer tax and home values are low, pay “just” $8,238 to sell a home —the lowest in the country. But imagine if you tried to cash out your 401(k) and the broker said, “Sure thing, there’s just an $8,000 fee.” You’d be incredulous.

Homeownership has helped generations of Americans grow their wealth, and a home can absolutely be a good investment—just not at all a typical one. When it costs $12,000 or more to sell an investment, Warren Buffett’s buy-and-hold-forever strategy is probably your best bet.