Are Home Sellers in Huntsville Really Spending $54,000?

The Huntsville Times recently published an article about the high costs of selling a home, quoting a survey by Clever Real Estate that reported home sellers spent an average of $54,000. That number seems astronomical. Was it just clickbait or solid journalism from the Huntsville Times? I'll say it: the Huntsville Times does an amazing job covering our local area. It's easy to take data from Clever Real Estate or elsewhere and simply report it to our local market without deeper analysis.

As you all know, each real estate market is different, including Huntsville. The fees associated with real estate transactions vary from market to market. What the Huntsville Times should have done is contacted us to help break down these numbers to see if they truly reflect the costs of selling a home in the Huntsville market. Not all the numbers are accurate, so let’s go over them line by line.

Breaking Down the Costs

Real Estate Commission Cost

The first, and biggest, cost is the real estate commission. The article used an average home price of around $360,000, which is close to both the median and average price range in Huntsville. So, in that sense, the commission figure was accurate. I will note that real estate commissions are facing scrutiny in the US due to settlements and lawsuits.

In the past few weeks, I’ve visited a few other countries while looking at investment properties. From my experience, the model and process we use in the US are far superior. For one, we have a functioning MLS system. In the countries I visited, one had a poorly functioning MLS with incomplete data, and the other had no MLS at all.

The importance of an MLS system becomes clear when discussing commissions. Without an MLS, it's tough to gauge whether you're paying a fair price, as there’s no solid benchmark to compare against. Without accurate data, you could easily overpay if the agent isn't providing reliable information.

Additionally, the countries I visited had similar commission rates, and sellers still paid for representation, which is now being decoupled in the US. Many sellers still pay for it, but it’s baked into the system, just as it was in the US. Long story short, the Huntsville Times got it right when it came to real estate commissions in their article. Ironically, by decoupling commissions, the US has taken a step back in making the process as straightforward as it is in other parts of the world.

Repair Costs

The next topic is repair costs, which average $10,000. I would argue that repair costs are essentially about bringing the home up to market value. You don't have to make repairs, but not doing so lowers the home’s value. If you are going to invest $10,000 in repairs, you need a real estate agent who can advise you: "If I spend this $10,000, will it result in at least $10,000, or maybe $15,000 to $20,000, in additional value?"

Repair costs often reflect normal wear and tear, which depends on the condition of the home. How long you've lived there and whether you’ve kept up with repairs or deferred maintenance both play a role. I don’t see this as a direct seller cost; it’s part of home ownership and investing to get top dollar when selling.

If you spend $10,000 on repairs, you should expect to add $20,000 to the list price due to those repairs. I don’t think this cost should be included in the $54,000 total, which is why I feel this article leans toward clickbait.

Closing Costs

Closing costs are highly dependent on location, whether by state or country. Here in Huntsville, Alabama, and particularly under the board contract we use, the seller is responsible for three key things. One of them, which we’ve already covered, is the commission. The other two are minor: one is half the title insurance, which, on a $360,000 home, would be around $750. The second is a document preparation fee, which is typically around $125. So, those costs total less than $1,000—much lower than the $8,000 estimated in the article because the commission was already factored into the first line item.

Other states have different closing costs. I’ve worked in states where $8,000 wouldn’t even cover everything, since they have additional taxes and fees involved in the transaction. Some states, for example, may not have state income tax, while Alabama does, so it’s a bit of a trade-off in which taxes you're paying. Ultimately, the government will get its taxes in one form or another.

Different states and countries also have drastically different closing costs. When I visited a few other countries recently, one charged an 8% upfront tax on home purchases, along with attorney fees of about 2%. So, buyers were looking at 10% of the total purchase price just to buy a home. Often, if a buyer can’t afford those costs, the seller may need to cover some of them, making these fees negotiable.

If our local newspaper had done its homework, it would have known that $8,000 in closing costs is far too high for our area. This makes the article feel more like clickbait and less accurate in that $54,000 figure.

Concessions

The next item mentioned was concessions, listed at $7,200. I would argue that this isn’t a seller fee; it’s just part of getting to the true market value of the home. Including this as a seller cost is misleading since it’s simply part of the negotiation process to achieve the final market value.

Moving Expenses

Moving expenses were listed at $3,250. That’s probably an accurate average. You could go as low as buying your buddy pizza for a cross-town move, but if you're relocating to another state, $3,250 might not cover it. So, this is definitely a reasonable part of moving expenses.

Marketing

Marketing costs were listed at $2,300. You should not be paying for marketing if you’ve hired a competent agent. I’ve heard of situations in other countries where sellers are responsible for some of their own marketing costs upfront, but that’s not typical in the US. So, including this is definitely part of the article’s attempt to inflate the numbers and make that $54,000 total seem larger.

Home Staging

The last item was home staging, at $2,263. This number is highly dependent on the market, but I will say most sellers don’t care about staging, and I’ve personally never had a client invest $2,263 in it. That number seems inflated. Usually, staging is done to place furniture or arrange things where needed, but for a $360,000 home, full staging rarely makes sense in terms of recouping the cost. Most people who stage do very light staging, so $2,263 is overkill and part of the effort to pump up that $54,000 figure.

If I were a seller and had to spend $54,000 to sell my home, I’d have serious regrets, and I’d probably hesitate to sell. Luckily for you in Huntsville, Alabama, that number is heavily inflated and doesn’t reflect reality in our market.

Sellers Prefer Buyers Cover Their Own Fees, But Reality Differs

The article also mentioned that "the overwhelming majority of home sellers now want buyers to pay their own agent fees." While this might stem from recent settlement changes, that's not what we're actually seeing in practice. Most sellers are still covering buyer agent fees.

Do most sellers want to pay these fees? Of course not. Just like any other cost, they’d prefer not to, as they’re trying to net the most money from their sale. But they understand that to achieve their goal of selling, they need to attract more buyers, which often involves paying the buyer agent fees.

In many cases, sellers are also buyers, and if they avoid paying buyer agent fees on their sale, they may have to cover those fees on their next purchase. For move-up buyers, who are selling a less expensive home and buying a more expensive one, this could end up costing them more. Sellers are willing to pay fees when they recognize that the value they gain is greater than the cost. That’s what we’re seeing in the market right now.

AI vs. Human Agents: Understanding the Real Difference

Another surprising claim from the article is that two-thirds of people believe AI could outperform human agents. This makes sense, depending on what you mean by "outperform." If we’re talking about data processing, of course AI can crunch numbers faster, provide facts instantly, and handle more data than any human could—AI doesn't need sleep!

But people don’t hire real estate agents just for data. They hire agents for their understanding of the human element—empathy, local knowledge, and the ability to interpret data based on the buyer’s unique situation. An agent helps navigate the complexities of the area, the market, and the personal factors that come into play when choosing a home.

Yes, AI can offer more data, but the real value of a human agent lies in their ability to blend that data with personal insights and provide tailored guidance, giving buyers a competitive edge.

Will Commission Changes Hurt First-Time Buyers?

The article quoted 88% of agents who believe that changes in commission structure could discourage first-time homebuyers from entering the market. If sellers stop paying buyer agent commissions for first-time buyers, I agree that it could definitely discourage them. But that hasn’t been the case in the market so far. If it does happen, it would be a huge problem—not just for first-time buyers, but for our economy and the country as a whole.

Our middle class is already facing significant pressure. While economic reports show averages that may look good, the reality is quite different. Those who own assets are doing well, but people who don't are struggling more and more. This widening gap is shrinking the middle class, which is a major issue. Homeowners have 40 times the net worth of renters, and building wealth through homeownership has been key to strengthening the middle class. If more people are forced into being lifetime renters, the middle class will continue to shrink—and that’s not good for the country.

Homeownership is essential for a strong middle class. If this shift happens due to commission settlements, it could be a disastrous outcome. I believe this situation will be overturned, but for now, first-time homebuyers are still entering the market. Interest rates are starting to come down, and I expect we’ll see a resurgence of first-time buyers in 2025 as affordability improves.

Huntsville Named a Top 10 U.S. City to Live In

One thing I think all Huntsville fans will agree with in the article is that Huntsville continues to rank in the top 10 best places to live in the U.S. If you're watching this video and haven’t yet made your move to Huntsville, Alabama, or if you want more information on the area, a private tour, or have any questions about buying your first home here, feel free to reach out to us at 256-333-MOVE.

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