Moving to a new house can bring a lot of excitement. Most of us dream of having certain things in a home or a property, and when some or all of those dreams come true, it’s only natural to be excited. But the reality is, moving is expensive.
In terms of building wealth and making the most of your money, staying put is usually the best option.
Unfortunately, sometimes moving is a necessity.
And in life, decisions are usually made on factors aside from just money. Maybe you’ve changed jobs and you don’t want to commute an hour each way. Or maybe you’d rather be in a different school district where your kids will get a better education. Sometimes the costs of a move are justified.
Or maybe you’re renting and ready to move into the world of homeownership.
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If you’re considering moving, be sure that you’re aware of the costs and the financial impact that it will have. Once you know what to expect, you can make the best decision for you and your family, keeping in mind the costs of buying and selling a house.
My wife and I have moved 3 times in our first 11 years of marriage. Each time I’m amazed at how much work and effort it takes, how frustrating it is, and how much money it winds up costing.
I keep saying I don’t want to move again, but then the seasons of life change and we decide to move. I hope we’ll be in our current house for at least the next 16 years until our kids are out of high school, but I’m not sure if that is just wishful thinking.
So let’s take a look at the costs you should anticipate if you’re considering a move. It’s unlikely that you’ll be on the hook for all of these costs, but that can vary depending on your situation.
I’ll break the costs into a few separate categories: selling your current house, the transition, and moving into the new house.
If you’re currently renting and looking to buy your first home, you’ll only need to pay attention to the costs related to the transition and moving into the new home.
The Costs of Selling a House
Here is a look at several of the most common costs associated with selling a home that you own.
1. Realtor Fees
One of the biggest fees is the cost of the realtor. This is typically 6% of the selling price, but it can vary a little. That fee is split between the seller’s agent and the buyer’s agent, but as the seller you will pay the entire fee.
Of course, you can list the house for sale by owner and avoid using a realtor. However, you’ll still have some costs (like marketing, photos, an attorney).
It’s also possible that many of the people who want to look at your house will be represented by a realtor. After all, it doesn’t cost the buyer anything to have a realtor, so why wouldn’t they want one? This means that you may need to pay a commission to a buyer’s agent or miss out on a big percentage of buyers who won’t buy the house without representation from an agent.
I’ve never attempted to sell a house without an agent, so I can’t speak from personal experience. But both times we’ve sold a house there have been significant issues that came up during the process, and we were very glad to have a professional representing us and looking out for our best interest. In my opinion, the service of a good realtor is worth the commission. But not everyone agrees with that.
2. Repairs and Touch-Ups
Regardless of how nice your house is, there will probably be at least a few repairs or touch-ups that you need to make before listing it. Obviously, you want the house to make a strong impression on potential buyers, and that usually means at least painting some rooms or repairing things you’ve been meaning to fix but never got around to it.
This can also include landscaping and curb appeal. In some cases it may also involve staging a house with rented furniture (probably not the case if you’re currently living in the house).
3. Repairs After the Inspection
Once you get an offer that you like and you have a contract to sell the house, it will probably be contingent on a home inspection. Home inspections can be quite thorough, and even homes in great condition will often have a few things that come up as a result of the inspection.
It’s likely that the buyers will ask you to fix any significant issues, at your expense, that come up during the inspection. These can be minor or major, but if you want to sell the house you’re likely to need to spend some money here.
4. Title Insurance
The seller will typically pay for the title insurance premium.
5. Transfer Taxes
Transfer taxes are imposed when you’re transferring the deed to another owner.
6. Closing Costs
Some buyers will request sellers to pay all or part of their closing costs. This is not something that is 100% necessary, but be prepared to get offers that ask you to pay some of these fees. This is especially common with first-time homebuyers who don’t have a lot of money saved up for a down payment plus all of the closing costs.
If it’s a seller’s market you may be able to avoid this, but some buyers may not be able to qualify for the mortgage without some seller assistance. Of course, if this is the case you’ll need to factor these costs into what you are willing to accept as a selling price.
Costs Related to the Transition
The expenses in this category are related to moving from one home to another. You probably won’t have all of these costs, but be prepared, because they can add up quickly.
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1. Professional Movers
If you don’t want to rely on family and friends to help with the move, you can hire professionals to do the work. Hiring movers can get very expensive, even for a local move, and even if you have a small house. Of course, the more stuff you have and the longer the distance, the more it will cost.
2. Truck Rental
If you don’t hire movers you will probably need to rent a moving truck. The daily rate for moving trucks is usually pretty reasonable, but in most cases there will be a cost per mile. If you’re moving more than just a few miles away, the mileage fee will add up.
Even if you’re hiring professional movers, you may also wind up renting a truck. Maybe there are certain things you prefer to move yourself, or maybe you want to save a little bit of money. For our most recent move two years ago we hired movers for furniture and big items, but I rented a cargo van and moved the boxes myself to save some money.
If you’re not moving into your new home right away you may need to rent storage space for a while. In some cases this may be combined with the move. When we moved from New Jersey to Pennsylvania in 2010 we used Pods. They dropped off the pod at our condo and we filled it with our stuff. Then they came to pick it up, and they stored it for a few days before delivering it to our house in Pennsylvania.
4. Lodging / Hotels
Depending on how your moving out lines up with moving into the new house, you may need to stay in a hotel for a short time. This may also be the case if you’re moving a long distance.
5. Travel and Gas
Likewise, if you’re moving a long distance there will be some travel costs involved.
6. Lost Wages
You will almost definitely need to take some time off of work in order to move. Hopefully, you’ll have some vacation or personal days that you can use, but not everyone has that option. If you’re self-employed or if you don’t get paid time off, you’ll need to consider the impact of lost wages.
7. Double Utilities
It’s very possible that there will be a time during the transition where you’ll be paying for utilities at your old house and your new house. Hopefully, this will just be a short time. But if your old house doesn’t sell and you’ve already moved, this could drag on for a while.
8. Replacing Items Broken During the Move
Whether you hire professional movers or do it yourself, chances are some things will get broken during the move.
If you’d like to, you can purchase insurance to cover the items being moved.
10. Moving Supplies
You may need to purchase things like boxes, tape, labels, padding, and blankets.
The Costs of Buying a House and Moving In
And now, let’s take a look at the expenses related to the new house.
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1. Home Inspection
After you have a contract on the house you will probably (and should) have the home inspected. Depending on where you live and the size of the house, the inspection will probably cost a few hundred dollars. If the house has well water or a septic tank, you may also need to get that inspected.
The bank will typically require an appraisal in order to issue the mortgage. The cost of the appraisal will also vary based on where you live, but again, it will be at least a few hundred dollars.
3. Closing Costs
Seeing all of the fees and costs related to buying a house can be scary. There are a lot of fees related to the settlement and the mortgage. As I mentioned earlier, sometimes buyers will ask the sellers to pay some of these costs. You can do that when you’re making an offer on the house. Keep in mind, it will reduce the amount of money the seller is getting, so it will impact how much they are willing to accept as a selling price. If you’re in a situation where you’re competing with other buyers you’ll have less leverage.
4. Property Taxes
You’ll need to pay the prorated property taxes at the settlement.
5. New Furniture
Most likely you’ll need some new furniture for the house. This is especially true for first-time homeowners moving from a smaller apartment. Don’t feel like you need to furnish the whole house right away.
You may also need to buy some new appliances for the house. In some cases, all of the appliances will be left by the seller, but it can vary. Even new homes will often need appliances like a washer and dryer. This is important to consider because appliances can be very expensive, especially if you need to buy several of them.
Unless you’re moving into new construction, you’ll probably need to budget some money for repairs. This could be minor or major, depending on the house you’re buying. Even if the house is in good condition you’re likely to have costs like a locksmith (changing the locks/keys), some new paint, and maybe supplies to remove wallpaper.
8. Home Warranty
Optionally, you can purchase a home warranty if you’d like.
9. Restocking the Kitchen
One cost that you may not think about is related to all of the basics in your kitchen and pantry that you’ll need to restock. If you’re moving locally you may be able to take pretty much everything with you, but that won’t always be the case.
It’s Your Decision
In a strictly financial sense, moving is usually a set back to your net worth. However, there are a lot of other factors in life that you’ll need to consider. Make the decision that is best for you and your family, but be sure you’ve taken the time to consider the costs before deciding what you can afford.
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