The Gap Between Sale Price and What You Keep
Selling a house costs 7–10% of the price before the mortgage is repaid. On a $525,000 sale that is $37,000–$52,000 — a figure most sellers underestimate until the settlement statement arrives.
| Cost | Typical level | On $525,000 |
|---|---|---|
| Agent commission | 4–6% | $21,000–$31,500 |
| Title, escrow, attorney | 0.5–1% | $2,600–$5,250 |
| Transfer tax | 0–2%, varies by state | $0–$10,500 |
| Repairs and concessions | $2,000–$10,000 | $5,000 typical |
| Staging, photography, moving | $1,000–$5,000 | $2,500 typical |
Commission Is Negotiable, and More So Since 2024
The 2024 settlement of the National Association of Realtors litigation ended the practice of advertising buyer-agent compensation on the MLS. Commission structures have become more openly negotiable as a result, and total rates below 5% are increasingly common. It remains the largest single cost of selling.
The Capital Gains Exclusion
Section 121 of the tax code exempts a large share of home sale gains from tax: $250,000 for a single filer and $500,000 for a married couple filing jointly. To qualify you must have owned and lived in the home for at least two of the previous five years, and not have claimed the exclusion on another home within two years.
The gain is calculated against an adjusted basis, not the purchase price. Capital improvements — a new roof, an addition, a renovated kitchen — increase the basis, as do the selling costs themselves. Repairs and maintenance do not. Keeping receipts for improvements over decades of ownership is worth real money at sale.
Investment Property Is Different
No Section 121 exclusion applies, the entire gain is taxable, and depreciation claimed over the years must be recaptured at up to 25%. A 1031 exchange can defer both by rolling the proceeds into another investment property, but the timing rules are strict: 45 days to identify a replacement and 180 days to close.
Timing the Payoff
The mortgage payoff figure is not the balance on your last statement. It includes interest accrued to the closing date and any prepayment or recording fees, so request an official payoff quote from the servicer rather than working from the statement.
Frequently Asked Questions
How much do I need to sell for to break even?
Roughly the mortgage balance plus 8% of the sale price. Selling within two or three years of buying often means bringing cash to closing, because the transaction costs exceed the equity built.
Can I avoid capital gains tax entirely?
Most primary-residence sellers already do, because the exclusion covers the whole gain. Above it, improvements and selling costs added to the basis are the main remaining lever.
Should I sell without an agent?
It saves the listing side of the commission and costs marketing reach, pricing expertise and negotiation. Studies consistently find FSBO homes sell for less, though the gap narrows in strong markets.