The average American moved homes every 5 years, quite frequently if you ask me. Very often these moves are motivated by finances- either a promising, better-paying job has popped up in a town far away, the opportunity of cashing in the rise in equity in your current home, or loss of income prompting a move to a cheaper property.
No matter whether you think you are making money or saving it, remember that the move itself comes at a cost. So if you think that this move will improve your financial situation, also consider the real price of moving.
Here are some costs that some people forget to add to their spreadsheet of relocation expenses:
- Real Estate Agent Cut
If you sold your home for $500,000, there’s no way that you are getting that full amount deposited into your bank account. Before you even get a chance to pop open that bottle of champagne, your real estate agent would have taken his or her cut, anywhere from 2% to 6% of the total selling price. If your selling agent worked with another agent to bring in a buyer, they split the commission between themselves, but unfortunately you won’t see any of it.
- Land Transfer Tax
Land Transfer tax is the fee collected by the municipal government for transferring the name of the property deed to the new owners. This, unlike the real estate fee, is covered by the buyers, not the sellers of the property, and can range from 1% to 2.5% of the purchase price, depending on the geographical area.
There’s no way around it, the sale and purchase of a house comes with the need to hire a real estate lawyer to accomplish a few things among which will be the checking and transfer of title, and the closing. Though some decide to go without a real estate agent, the lawyer is an indispensable expense which you cannot get omit and can cost you anywhere between 1.5% to 4% of the sale price. There are benefits to more intimately involving your lawyer into the process of buying and selling your home. He or she can help avoid situations in which there is an issue with the brokerage commission, or unclear clauses in the offer or purchasing agreement.
- A Moving Team
The price of the actual physical move is also something to take into consideration when doing your math and seeing whether it’s financially feasible for you to change your living situation. When you add up the cost of the boxes, hiring a moving team, renting a truck or van, gas, and more, don’t be shocked if it ends up being more than four thousand dollars if the move is interstate. Local moves tend to be cheaper, probably half the price, but still a considerable sum of money. This price can become even more substantial if you need to hire movers specializing in moving heavy objects and pianos, or you have large fragile pieces that need special attention.
Of course, every situation is a little different, with those upsizing needing to buy more furniture, while those downsizing considering the rental of additional storage lockers to keep their excess items and furniture which won’t fit in their new home. Some houses are sold without appliances, or the existing ones are old and need to be replaced. Case proven, it costs money to move, and that doesn’t even cover the direct cost of the house or condo you are purchasing. If you still are thinking that it’s time to shoot the coop, make sure that you understand the full financial implications related to changing your address.