If you’re selling your home, it’s important to know how to calculate the closing fees and to factor those into the sale price. Closing costs vary according to where you live, but as the seller, you can expect to pay anywhere from 6 percent to 10 percent of the home’s sales price in closing costs at settlement.
While this won’t be cash out of your pocket, it will be deducted from the profit on the home (unless you’re selling with very low equity on your mortgage). In this case, you might need to bring some money to the table to satisfy your lender—and some closing costs may be held in escrow. Here, realtor.com explains the five most common fees associated with selling your home.
1. Seller costs
One of the largest closing costs for sellers at the time of settlement is the commission for all of the real estate agents who are involved in the transaction. While real estate commissions can be negotiated and vary by market, a typical commission is 6 percent of the sale price of the home split between the listing and buyer’s agents.
For example, the real estate agent’s commission would be $21,000 on a $350,000 purchase price. Buyers, meanwhile, have the advantage of relying on sellers to pay agent commissions.
2. Loan payoff costs
When selling their home, most people seek a price that will pay off their mortgage loan. The payoff balance often will be a little higher than the remaining balance, and even the buyer’s purchase price, due to the lenders’ prorated interest on the mortgage.
In some cases, your lender may require you to pay a prepayment penalty for paying off your mortgage loan before the end of the term. If you have a home equity loan or line of credit, in addition to your mortgage, the lender will require this be paid in full at settlement as part of closing costs for the seller.
3. Transfer taxes or recording fees
Transfer taxes, recording fees, and property taxes are key parts of a seller’s closing costs. Transfer taxes are imposed by your state or local government to transfer the title from the seller to the buyer and are part of the seller’s closing costs. Along with transfer taxes and recording fees, property taxes also must be up-to-date for sellers before handing over keys to the buyer.
4. Title insurance fees
Title insurance fees are another thing to keep in mind when selling real estate. As part of closing costs, sellers typically pay the buyer’s title insurance premium, with the title insurance protecting buyers and lenders in case there are problems with the title in a real estate deal.
5. Attorney fees
Sellers who opt to have an attorney represent them at the settlement of their real estate sale may have to pay attorney fees as part of the closing costs. In some areas, both buyers and sellers have their own attorneys, while it’s more common in others to have one settlement attorney for the real estate transaction. In some areas, the buyer pays the attorney fees, while the seller pays in others.