Call Us Anytime!
(844) 935-2345The seller should expect to pay significant closing costs, including commissions for real estate agents and transfer taxes.
You may expect a good profit once you accept an offer for your home. But then come all of the closing costs you’re expected to pay. The closing cost for a seller may be between 6% and 10% of the sales price.
The closing costs are deducted directly from the sale proceeds if you have a lot of equity. Although you're still spending money, the loss is less painful because the money never reaches your bank account.
You and the buyer both receive the closing disclosure three business days before the closing. This will lay out all the details of the sale with real numbers, so you'll know what everything costs — and have the chance to get any errors corrected.
Here are some common closing expenses for sellers and tips on lowering them.
Most sellers pay the highest closing cost - the commissions of their real estate agent.
It’s common for the seller to pay the commission for both the listing agent and the buyer’s agent. That’s usually a 6% hit to your bottom line, with 3% of the home’s selling price going to each agent involved in the transaction. For a home sale of $250,000, this would come to $15,000
You could choose to sell your home yourself, but you would still be required to pay for the buyer's representative. If you're looking for a low-cost agent, they may offer fewer services in exchange for their lower commission. If you're looking to sell in a hot market, your home has a high value, or if your listing agent also helps you purchase your next home, then you might be able to negotiate a lower fee.
The lender’s title insurance policy is another closing cost a seller can expect to pay.
Before a sale is made, a search of the title is performed to confirm ownership. In some states, a real-estate attorney must also review the title. Title policies protect the lender and the home buyer (if they choose to purchase their own policy) from any unexpected claims of ownership.
While not common, an ownership claim can trigger legal disputes — and the extensive lawyer's fees that come with them. The cost of title insurance is not negotiable, but the trouble you could avoid with it may be worth it.
The parties may negotiate the payment of fees, but many state and local authorities determine the exact costs for recording and filing fees or transfer tax. Sellers are often required to cover the deed or property transfer tax.
The buyer will share the homeowner association and property taxes (unless you, as a seller, agree to pay them). The closing date is usually used to prorate these costs. For example, if the closing date was the 15th, the seller would be responsible for the 1st through the 14th. As the new owner of the house, the buyer would be responsible for the closing costs.
Taxes are usually not negotiable. In a hot market, however, you may get the buyer to cover more fees. Local laws can determine which party is responsible for paying these costs, so you are unlikely to be able to avoid them if they fall under the seller's responsibility.
In a buyers' market, or simply to get the deal done, you may agree to pay for some closing costs. This is referred to as a seller concession, seller contribution or seller credit — these terms all mean the same thing. Seller concessions include agreeing to pay the cost of any repairs needed during the home inspection.
The amount of concessions you can offer your buyer if they don't pay cash may be restricted by the type of loan that they use. The maximum seller concessions for a conventional mortgage on a single-family home that is intended to be the primary residence can range from 3% up to 9%, depending on how much the buyer pays as a down payment and if they receive any other closing cost assistance. The Federal Housing Administration and other government-backed loans have different limits for seller concessions.
It's important to remember that, even though it's technically not a closing fee, you will still have to pay off your mortgage if you don’t own your house outright. You may have to pay a fee if you pay off your mortgage early. You can check your mortgage document to see if you are subject to a prepayment fee.
Before you can sell the property, if there are any liens on it or any judgments that have been entered against it, these will need to be paid. The title search may reveal these.
You will also need to pay off second mortgages, such as home equity loans or home equity lines of credit. Prepayment penalties may also apply. Your property secures these loans. If you stop owning the house, you cannot continue to borrow.
