Most people in the process of selling a home hope for a financial gain, regardless of the reason for selling. It’s important to know the expected final financial position going into the sale to ensure enough is made to meet any outstanding obligations or to know if additional out-of-pocket funds are needed at closing.

It can be easy to underestimate the cost of selling a home. There are several factors to consider before moving forward.

Mortgage payoff

Typically, the largest expense is the mortgage payoff. While most sellers have an idea of the principle payoff amount, an exact payoff amount must be obtained from the bank. The payoff amount will be quoted as of the closing day and will include principle payoff, interest expense owed and any payoff penalties or fees.

Real estate agent commission

For a single-family house, condo or townhome, expect to pay 5% to 6% of the selling price in real estate agent commission. For unimproved properties, expect to pay up to 10% of the selling price. Commission is shared between the listing agent — who represents the seller — and the buyer’s agent — who represents the buyer/purchaser.

Home inspection repairs

A seller may opt to have a pre-home inspection prior to listing the home. Costing a few hundred dollars, this inspection will examine the home for potential issues and safety concerns. When the inspection report is received from the inspector, the seller will want to remedy any major items listed on the inspection report prior to listing the home for sale. If a seller chooses to sell the home “as is” and not address the needed repairs, a concession in sales price should be considered.

Additionally, it is likely the purchaser of the home will elect to have a home inspection and make the purchase contract contingent on that inspection. While the purchaser can choose which repairs on the inspection report to ask the seller to fix, it can be expected most major items will be requested for repair.

As a rule of thumb, older homes and those with deferred maintenance should expect to spend more on home inspection repairs. While it is possible to sell a home without making any of the noted inspection report repairs, most buyers will expect to be compensated another way, most commonly through sales price concessions.

Closing costs

When selling a home, be prepared to pay several closing cost fees. This can include — but is not limited to — prorated real estate tax, deed preparation fee, attorney’s fee, mortgage release management fee, government recording fees, including grantors tax and assignment of dock permit fees, and a pest inspection fee. If property taxes have been paid in advance for the year, however, sellers could receive a credit for this at closing.

Capital gains tax

When selling a home for more than what was paid for it, reporting of capital gains may be required. IRS rules allow homeowners selling their primary residence to earn up to $250,000 profit without having any capital gains tax liability. Therefore, most U.S. homeowners face no tax requirements when selling a home. However, the property must qualify as a primary residence to receive this tax break.