If you’re getting ready to sell your home in Florida, you’re probably focused on what most home sellers think about: how much money you'll make.
It’s logical and natural. If you sell something, you’re going to make money doing it, right? Not always. While it’s unlikely that you’ll lose money selling a home unless something has gone very wrong, it’s very likely that you haven’t fully considered the costs of selling. This can lead to a miscalculation in exactly how much profit you’ll stand to gain from the transaction.
Many of the costs you have to consider aren’t as obvious as others. That’s why it’s important to educate yourself and to work with an experienced, local real estate agent who can lend you their expertise.
While working with a real estate agent is your best bet for maximizing your profit margins, the following information will empower you to start looking at the true costs of selling a home. That way, you can arrive at a more realistic conclusion of what you stand to earn.
How Much Can I Expect for My Florida Home?
What you can expect to make from the sale of your Florida home greatly depends on where you live. Markets can change drastically even from one zip code to another, and statewide even more so. That being said, here are some numbers that can help you out.
In the state of Florida, generally speaking, the median home value is $233,700, according to data from Zillow. The median sale price is $227,800 and the median list price is $295,000.
However, when you’re selling matters, too. Home values in Florida have risen by 6.3% in the last year, but they’re expected to rise another 3.6% in the coming year. If you’re selling your house a year from now, you might be able to earn more from the sale.
That being said, as mentioned previously, the amount you can expect to earn from your home varies from location to location. Let’s take a look at a few examples.
In the city of Pensacola, the median home value is $145,100, well below the state median. The median list price here is $229,953 and the median sale price is around $164,500. However, the expected rise in home values for Pensacoloa is actually higher than the state average. After seeing a growth of 10.9% in the last year, home values are expected to rise another 7.1% in the coming year.
To take an extreme example on the other end of the spectrum, Aqualane Shore, a neighborhood in Naples, Florida, has a median home value of $4,023,500. Home values have risen here by 11.1% in the last year and are expected to rise another 4% in the coming year. The median list price is $5,097,000, and while data is spotty for the median sale price in this area, it’s way above the sale prices in many other locations in Florida.
You can see how location plays a huge factor in how much you can earn. Places like Orange Beach, which has a median home value of $365,000, and other popular areas have vastly different markets. Work with your real estate agent to determine the price you can most likely expect for your particular home.
Some Typical Costs and Fees to Expect When Selling a Florida Home
There are a variety of costs you should consider when selling your home in Florida. All of these costs eat into your profit margin, and while this isn’t a comprehensive list, it should help you start thinking of home selling costs you might not have previously considered.
Real Estate Commission
During a typical real estate transaction, the seller pays about 3% commission to both the buyer’s agent and the seller’s agent which results in a 6% commission rate. If we take the median sale price in Orlando, which is $250,500, that would work out to a $15,030 commission.
In order to maximize your profit margins, consider working with a flat-fee real estate agent who can help you lower the total commission you pay, increasing the amount of profit you can make on your sale.
Learn More: What Is a Low-Commission Real Estate Agent?
Renovations and Repairs
There’s a 1% rule that’s often spoken about in real estate circles. The idea is that you should put 1% of your home’s value away annually in order to cover repairs and general home maintenance costs.
If we use our Orlando home example from above, that would mean that you’d need to put away at least $2,505 annually to cover these costs.
However, in some areas of Florida, the average annual maintenance expenses exceed $12,000, even in areas where $12,000 is well above 1%.
Learn More: 6 Low-Cost, High-Value Renovations & Repairs
Staging your home, or designing it so that it’s inviting and presentable, can be a costly endeavor. However, it’s extremely important to complete this step so that your home has the best chance of selling quickly, selling for a higher price, and being assessed at a higher value.
Initial consultation costs for staging can range anywhere from $150 to $600. Beyond that, the actual costs of staging itself can range from $500 to $600 per room per month.
While this might seem like an unnecessary expense, research has shown that proper staging can increase the value of a home by 1% to 5%. In some cases, that number is as high as 6% to 10%.
What’s more, staging can drastically reduce the time it takes you to sell your home. Selling real estate has an element of marketing to it, and, as in most marketing in the modern age, visual appeal sells.
The same reason that flashy videos and excellent photography can sell a product is the reason that beautiful staging and curb appeal can sell a home. People respond to the things they find visually attractive and appealing.
Learn More: How Much Does Home Staging Cost? Is It Worth It?
Capital gains taxes and transfer taxes are two types of real estate taxes that are often overlooked in fiscal considerations. Fortunately, only one of these is likely to apply to you.
Capital gains taxes are the taxes assessed on the profit you made from your home sale. They’re usually paid at the time you file your taxes. That being said, as long as the home you sold was your primary residence and you lived there for at least two of the last five years, you can exclude up to $250,000 of profit and avoid paying capital gains taxes (for married couples filing jointly, that limit is $500,000).
Transfer taxes, which, in the state of Florida are referred to as documentary stamp taxes or doc stamps, are paid when a property such as a home or vehicle changes hands.
The transfer tax rate in all Florida counties outside of Miami-Dade is $0.70 for every $100 you paid for the property. In Miami-Dade this rate is $0.60 per $100 for single-family residences, while other types of residences can incur an additional $0.45 per $100.
Using Miami’s median sale price of $313,300, that means you could be paying anywhere from $1,879.80 to $3,289.65 in transfer taxes depending on the type of home you’re selling. If you live outside of Miami and your home sold for the same amount, you could expect to pay $2,193.10.
While the seller usually pays this tax, the ultimate decision of who is responsible occurs during negotiations. That being said, it’s worth calculating into your financial considerations when you’re trying to determine the profit you’re likely to make from your sale just in case.
Finally, closing costs are a critical consideration that sellers should make when attempting to determine the amount of money they’re likely to make from a sale.
Given that most sellers can expect to pay between 2% and 4% of the sale price of their home in closing costs, failing to take these costs into consideration can lead to inaccurate assumptions regarding how much you’ll take home from the sale.
Using our example of Miami’s median sale price from above, $313,300, that means you can expect to pay anywhere from $6,266 to $12,532 in closing costs.
Of course, this figure depends upon where you live, with some areas owing much more and some owing much less. That being said, it’s still something you want to figure into your estimations in order to arrive at the most accurate prediction of final take-home profit.
Learn More: Who Pays Closing Costs on a House?
3 Tips to Maximize Profits on the Sale of Your Florida Home
It’s clear that selling a home can be a very costly experience, especially if you’re not prepared for it. However, there are a few things you can do in order to maximize your profit.
Time Your Sale to Get Top Dollar for Your Florida Home
When you sell your home can have a huge impact on how much you can expect to get. For instance, in the Miami metro area, January, May, and July are the best times to sell if you want to earn the most.
Those months historically see more homes selling above list price than any other.
In Tampa, though, the months that see the most homes selling above list price are January, March, and April. It’s clear that where you sell and when you sell work together to determine how much you’ll actually earn, so it’s important to pay attention to the market in your area.
Negotiate Like a Pro
You can save a great deal of money just by knowing how to negotiate. In real estate, just about everything is up for negotiation. How much you actually sell for, who pays for the closing costs, who’s responsible for the inspections and repairs, and who handles the transfer tax are just some of the facets you can negotiate.
It’s important to work with an experienced real estate agent who’s good at negotiating so they can act as an advocate for you and ensure you’re getting the most out of the sale.
Work with a Flat-Fee or Low-Commission Real Estate Agent
Working with a flat-fee or low-commission real estate agent can save you thousands. Clever’s model is designed specifically to help in this regard.
Clever Partner Agents work on a flat-fee basis. You’ll pay 1% for the listing fee and just 3% for real estate commission to the buyer agent.
In Miami, if you paid full commission on a $313,300 home you’d end up owing $18,798. With Clever, you’d only pay $12,532. In other words, you get the same exact quality and range of service options, but you save an average of $6,266.
If you want to sell your home with the help of an expert, top-rated agent in your area who can guide you through the entire home selling process and save you thousands, contact Clever today. We’ll put you in touch with a local Partner Agent for a no-obligation consultation so you can get started down the road to a successful sale right away.