When selling a home, many homeowners may not realize that there are costs associated with the transaction, known as closing costs. These costs can add up quickly and can significantly impact the amount of money you receive from the sale of your home. In this Redfin guide, we’ll break down everything you need to know about closing costs for sellers, including how much you can expect to pay and what expenses are negotiable.
What Are Closing Costs for Sellers?
Closing costs are fees and expenses that are paid at the closing of a real estate transaction. These costs cover various services and taxes that are required for the sale of a home to be completed. While buyers typically have more closing costs, sellers also have their fair share of expenses. The total amount of closing costs for sellers can range from 1% to 3% of the final sale price of the home.
Expenses Required to Be Paid by Sellers
1. Commission Fees
The most significant expense for sellers is typically the commission fees paid to the real estate agents involved in the transaction. The commission fee is usually split between the buyer’s agent and the seller’s agent, with each receiving a percentage of the final sale price. The national average for commission fees is around 6%, but this can vary depending on the location and the price of the home.
2. Transfer Taxes and Recording Fees
Transfer taxes are taxes imposed by the state or local government for transferring the ownership of a property. These taxes are typically based on the sale price of the home and can range from 0.01% to 2% of the final sale price. Recording fees are charged by the county or city to record the deed and other legal documents related to the sale. These fees can range from $10 to $50.
3. Title Insurance
Title insurance protects the buyer and lender from any legal problems that may arise with the title of the property. In some cases, sellers may be required to pay for the buyer’s title insurance policy. This can range from 0.5% to 1% of the sale price of the home.
4. Attorney Fees
In some states, it is required for sellers to have an attorney present at the closing of the sale. The attorney’s fees can range from $500 to $1,500, depending on the complexity of the transaction.
5. Property Taxes
Sellers are responsible for paying any outstanding property taxes up until the date of closing. These taxes can add up quickly and can significantly impact the final amount you receive from the sale of your home.
6. Home Warranty
Some sellers may choose to offer a home warranty to the buyer as an extra incentive. A home warranty can cover the cost of repairs or replacements for certain items in the home, such as appliances or HVAC systems. The cost of a home warranty can range from $300 to $600.
Negotiable Expenses for Sellers
While some expenses are required to be paid by the seller, there are also some negotiable expenses that can be discussed with the buyer.
1. Repair Costs
During the home inspection, the buyer may request repairs to be made before closing. Sellers can negotiate which repairs they are willing to make and which ones they would prefer to offer a credit for.
2. Home Inspection Fee
In some cases, sellers may choose to pay for the buyer’s home inspection fee. This can range from $300 to $500, depending on the size and location of the home.
3. Closing Costs Assistance
Buyers may request for the seller to cover some or all of their closing costs. This can be negotiated as part of the purchase agreement and can range from 2% to 5% of the sale price of the home.
Tips for Reducing Closing Costs as a Seller
1. Shop Around for Commission Fees
Not all real estate agents charge the same commission fees. It’s essential to do your research and compare rates before choosing an agent to work with.
2. Negotiate With the Buyer
As mentioned, some expenses can be negotiated with the buyer. Don’t be afraid to discuss these costs with the buyer and come to a mutually beneficial agreement.
3. Consider Selling “As-Is”
Selling your home “as-is” means that the buyer will purchase the home in its current condition, and you will not be responsible for any repairs. This can save you money on potential repair costs.
Closing costs for sellers can add up quickly and significantly impact the final amount you receive from the
