Before you list that property, let me show you something important: selling costs more than most investors realize.
Between preparation, marketing, commissions, and closing costs, you’re looking at 8-12% of the sale price disappearing before you see a dime. On a $500,000 property, that’s $40,000-$60,000.
That number should make you pause and ask: is selling really the best move? Or is there a better way to achieve your goals?
Before Selling: Consider Your Alternatives
Refinancing might work better. If you’re selling to access equity for another investment, a cash-out refinance might accomplish the same goal. You access capital without paying selling costs, keep the property generating income, and maintain exposure to future appreciation.
Refinancing makes particular sense when you’ve built substantial equity and current rates are favorable.
When selling actually makes sense:
- Refinancing doesn’t provide enough capital
- The property no longer fits your strategy
- Management headaches outweigh returns
- Market timing suggests optimal selling window
If selling is truly best, understand what it will cost at each stage.
Stage 1: Preparing the Property
| Improvement Type | Typical Cost | Value Recovery |
|---|---|---|
| Minor repairs | Low | Usually high |
| Kitchen updates | Moderate-High | Moderate |
| Bathroom updates | Moderate | Moderate-High |
| Cosmetic refresh | Low-Moderate | High |
| Major renovation | High | Often lower |
Strategic preparation matters. Not all improvements generate returns exceeding their costs. Walk through the property, document everything needing attention, get estimates, then research comparable sales.
Focus on high-return improvements while avoiding over-improvement. Sometimes selling as-is at slightly lower prices makes more sense than expensive renovations.
Staging affects perception. Professional staging creates emotional connections that can translate to higher offers and faster sales. Costs vary by property size and duration. DIY staging saves money but often doesn’t achieve the same results.
Stage 2: Marketing Expenses
Photography is non-negotiable. First impressions happen online now. Professional images make listings stand out. This is not where to cut corners.
Additional marketing may include:
- Video tours or drone footage
- MLS listing fees
- Premium placement on real estate websites
- Print advertising or social media promotion
If working with an agent, many marketing costs are covered through their commission.
Stage 3: Closing Costs
Real estate commissions are typically the largest single expense. Sellers usually pay both listing agent and buyer’s agent commissions—a percentage of sale price. Rates are negotiable.
Before obsessing over commission percentages, consider what different agents will actually deliver in sale price and timeline. Higher commission with higher sale price may net you more money.
Legal fees cover purchase agreement review, closing documentation, title issues, and closing representation. Varies by complexity and local rates.
Other closing costs:
- Title insurance
- Transfer taxes
- Outstanding property taxes or utilities
- Mortgage payoff amounts
- Buyer credits or concessions
Request preliminary closing cost estimates early so you can budget accurately.
Calculating Your Real Net Proceeds
Start with expected sale price.
Subtract everything:
- Preparation costs
- Marketing expenses
- Commissions
- Legal fees
- Other closing costs
- Outstanding mortgage balance
What remains is your actual net proceeds.
This number reveals your real return—what you’ll actually receive after obligations are satisfied.
Compare to alternatives. How does this compare to refinancing while retaining the property? How does it compare to continued rental income over coming years?
Minimizing Selling Costs
Strategic preparation spending. Focus on improvements generating returns exceeding costs. Get multiple estimates. Negotiate contractor pricing.
Commission negotiation. Rates are always negotiable. Consider what services you actually need. Flat-fee listing services or reduced commissions may work for your situation.
Timing considerations. Selling during strong market conditions may generate higher prices that offset costs more favorably. Understand your local market’s patterns.
Frequently Asked Questions
What percentage goes to selling costs?
Should I complete repairs before selling?
Can I avoid paying buyer's agent commission?
How much does staging cost?
What happens to my mortgage when I sell?
When does refinancing make more sense than selling an investment property?
How do I calculate true net proceeds from selling an investment property?
The Bottom Line
Ready to explore your financing options? Book a free strategy call with LendCity and let our team help you find the right path forward.
Selling costs are substantial. Understanding them helps you budget accurately and evaluate whether selling truly achieves your goals better than alternatives.
Sometimes selling is clearly right. Sometimes refinancing or continued holding serves you better. Run the numbers before assuming selling is the answer.
If selling is best, invest strategically in preparation that generates returns. Negotiate where possible. Calculate true net proceeds rather than focusing on sale price alone.
That’s how you make smart decisions about when and how to exit investments.
Disclaimer: LendCity Mortgages is a licensed mortgage brokerage. Content on this page is for educational purposes only and does not constitute legal, tax, investment, securities, or financial-planning advice. Rates, premiums, program terms, and regulations referenced are as of the page's last updated date and are subject to change. Any investment returns, rental yields, tax savings, or case-study figures shown are illustrative only — they are not guaranteed, not typical, and individual results will vary. Consult a licensed lawyer, Chartered Professional Accountant, or registered dealer before acting on any information above. Editorial standards.
Written by
LendCity
Published
August 13, 2026
Reading time
5 min read
Appreciation
The increase in a property's value over time, which builds [equity](/glossary/#equity) and wealth for the owner through market growth or [forced improvements](/glossary/#forced-appreciation).
Cash-Out Refinance
Refinancing for more than you owe to pull out equity as cash, often used to fund down payments on additional investment properties.
Closing Costs
Fees paid when completing a real estate transaction, including legal fees, land transfer tax, title insurance, appraisals, and adjustments. Closing costs affect your total cash invested and therefore your [cash-on-cash return](/glossary/#cash-on-cash-return).
Contractor
A licensed professional hired to perform construction, renovation, or repair work on investment properties. Using licensed and insured contractors is essential for permitted work, as unlicensed contractors can result in voided insurance, property liens, and liability for injuries.
Equity
The difference between a property's current market value and the remaining mortgage balance. If your home is worth $500,000 and you owe $300,000, you have $200,000 in equity. Equity builds through mortgage payments, [appreciation](/glossary/#appreciation), and [forced appreciation](/glossary/#forced-appreciation). See also [LTV](/glossary/#ltv) and [Refinancing](/glossary/#refinancing).
MLS
Multiple Listing Service - a database used by licensed real estate agents to list properties for sale, providing standardized property information, photos, and pricing. Investors also use off-market strategies to find deals not listed on the MLS.
Property Tax Assessment
The process by which a municipality determines the value of a property for taxation purposes. Investors can appeal assessments they believe are too high, potentially reducing annual property tax expenses and improving cash flow.
Property Tax
Annual tax levied by municipalities on real estate based on the assessed value of the property. Property taxes fund local services and are a significant operating expense that investors must account for in cash flow projections.
Real Estate Agent
A licensed professional who represents buyers or sellers in real estate transactions, providing market expertise, negotiation skills, and access to the MLS. Working with an investor-friendly agent who understands rental property analysis and financing strategies can significantly impact deal quality.
Refinance
Replacing an existing mortgage with a new one, typically to access equity, get a better rate, or change terms. Investors commonly refinance to pull out capital for purchasing additional properties (cash-out refinance) while retaining ownership of the original property.
Hover over terms to see definitions. View the full glossary for all terms.