Selling your home? Don’t forget insurance, other costs

​Real-estate broker commissions aren't the only costs that homeowners need to consider when selling their homes. You'll also want to plan for repairs, staging and, on both the home you're selling and the home you're buying, insurance – ideally avoiding overlapping coverage during the transition. Factor these five easy-to-overlook costs into your budget for selling your home.

1) Insurance.

PEMCO works to avoid coverage overlap whenever possible for members selling a home and buying a new one. However, depending on the homes' individual closing dates, keeping both covered may require a bit of choreography. Here are some possible scenarios:

• You've found your new home. For homes in Washington and Oregon, we can get your policy pre-approved when you sign the contract (normally about 30 days before closing) and be ready to supply Proof of Insurance to your mortgage company when that date draws near. For convenience, you can have the cost of your homeowners insurance built right into your monthly mortgage payment (along with property taxes) and your lender will pay it out of an escrow account.
  
  When you insure both your old home and new home with PEMCO, we can help coordinate the transition to ensure no gaps in protection. Also, if there's any chance your new home could be at elevated risk for flooding, we urge you to talk with us about adding flood insurance through FEMA or other specialty providers. While we don't sell it ourselves, your local PEMCO agent or PEMCO Insurance Agency can help you get connected.
  

• You're living in the home you're selling and you'll move into your new home as soon as it closes. This is an easy scenario because, from an insurance standpoint, nothing has changed. Your payments, whether you make them through your mortgage company or you pay them directly, continue until the buyer's funding comes through and the house closes. At that point, insuring your old home becomes the buyer's responsibility. When your new home closes, insuring it becomes your responsibility and, with the help of your PEMCO agent, you'll already have everything set up (above).
  

• You've moved out, but the home is staged for showing. Some people want to avoid the hassle of constant showing (no clutter, no personal items, no cooking smells, no pets roaming freely) and opt to live in a hotel or with relatives during the showing process. Unoccupied rather than truly vacant homes aren't treated any differently than a home you're actually living in. And fortunately, personal-injury accidents during showings are so rare that we don't recommend any additional liability coverage beyond what you normally carry.
  

• You've moved out for more than 30 days or the house is empty. Vacant, as opposed to unoccupied but still staged, homes are more likely to suffer damage and break-ins than homes that appear lived in. PEMCO, like most insurers in the United States, maintains coverage limitations on vacant homes. For example, we can't cover glass breakage and vandalism/malicious mischief on homes that are empty for more than 30 days.
  
  For vacant homes, we urge sellers to take the same steps they would for an extended vacation, like hiring someone to check on the home and maintain landscaping, putting lights on timers and installing protective alarms including monitored water sensors in case a pipe leaks. Your local PEMCO agent or a representative at 1-800-GO-PEMCO can help with options for insuring a vacant home.
  

• The closing dates of your old home and new home are out of sync. This is common, but fortunately, they're usually off by just a few days. That's especially true in this red-hot market where most homes sell quickly, often without inspections. The simplest solution is to leave your policy on the old home as-is until the buyer's loan closes, even though you've already closed on your new home and insured it.
  
  However, if there's a snag with the buyer's mortgage company and things will drag on for several weeks, talk with your local PEMCO agent or a representative at 1-800-GO-PEMCO. We also can help if, for example, you've worked out an arrangement with the buyers to stay in your old home and rent from them while your new home closes. In that case, you may need temporary renter insurance to cover your personal belongings and liability concerns.
  

• You've prepaid your insurance and are owed a refund. Tell your local PEMCO agent or a representative at 1-800-GO-PEMCO that your home has sold. Many people assume their mortgage company will take care of that and, unfortunately, they often don't. That delays your refund. We send premium refunds directly to you, even if you're using the same lender for both your old and new homes.
   
  

2) Real estate agent commissions.

Commonly around 6% of the sales price, fees for both the listing broker and the buyer's agent typically are paid by the seller. You don't pay this fee in advance. It's taken from proceeds of the sale at closing. Commissions are the primary way real estate agents get paid, and the fee reflects the time they spend helping you prep your home for sale, attracting qualified buyers and guiding you through the legalities of selling a home. Commissions make up the largest chunk of the closing fees that sellers typically cover (most fall on buyers). To avoid the fees, some sellers opt for discount brokers, who charge lower fees in exchange for more limited services, or they even act as their own agents.

We're big admirers of conscientious, reputable agents, and we've seen them save more than one buyer from a home that could have turned into a money pit. Rather than go DIY to resolve your concerns about commissions, especially if you don't buy and sell real estate frequently, instead consider interviewing a few agents to get a sense of the services they offer and at what price. You may be able to find a happy medium between full price and trying to go it alone. 

Other common seller costs you'll want to be aware of may include recording and attorney fees.

3) Repairs. 

Even in a hot market, repairing defects or making cosmetic upgrades will push a home's price higher. A kitchen refresh could net you thousands, while an unaddressed problem that's discovered during an inspection could scuttle your sale at the last minute. All your seasonal maintenance will pay off with a home that's nearly sale-perfect with no added work.

4) Staging.

By accentuating your home's best features, stagers can generate interest from multiple buyers. That could result in competing offers that go well beyond the asking price. Staging isn't cheap, though, and depending on how much furniture you rent, you could be looking at $500 per room per month. If you spring for professional photography to draw in online buyers, you'll spend even more.

5) Pre-inspection.

In a heated market, buyers may waive their right to an inspection to help their offer outshine competitors. However, depending on conditions in your area, you may want to ask your real estate agent if there's an advantage to having the home pre-inspected yourself. By reassuring prospective buyers that the house is sound, you encourage them to jump in with their top offers, perhaps shortening the time you must show the house and sparking competitive bidding.