Do You Know About These Unexpected Seller Closing Costs?

Buyers aren’t the only ones with closing costs. Sellers have expenses to consider as well, and knowing what they may include makes it much easier to plan ahead. The actual amount depends on your location, your contract, and the specifics of your sale. Before closing, you’ll receive a statement showing the charges and how they affect your proceeds. Let’s look at some of the costs you may see so you’ll have a better idea of what to expect.

At closing, your proceeds from the sale are calculated after amounts such as any remaining mortgage balance, applicable closing and recording costs, and agreed-upon real estate compensation have been accounted for. Here are some of the expenses that may be part of that calculation:

PRORATED TAXES
Property taxes are often divided according to how long you owned the home during the applicable tax period. Depending on where you live, other local charges, such as sewer or water fees, may need to be accounted for as well. If your mortgage included an escrow account for taxes, those funds may also factor into the final calculation.

HOME OWNER ASSOCIATION (HOA) FEES
If your property belongs to an HOA, association fees may be prorated according to the closing date. There can also be other HOA-related charges depending on the community and transaction. I can help you identify what applies so those expenses don’t come as a surprise.

TITLE INSURANCE
Responsibility for an owner’s title insurance policy varies depending on the state, local customs, and what is negotiated in the purchase agreement. When applicable, the policy provides protection against certain title claims or defects. Any title-related charges that apply to your sale will appear as part of the closing figures.

RECORDING FEES
There may be local government fees for officially recording documents associated with transferring ownership. These charges vary by jurisdiction and according to which documents need to be recorded.

TRANSFER TAXES
Some states and municipalities charge transfer taxes when a property changes ownership. How much is charged — and who is responsible for paying it — can depend on local requirements and the terms of the transaction.

ATTORNEY FEES
Depending on where you live, an attorney may participate in the closing or serve as the closing agent. If attorney fees are your responsibility, they’ll need to be included when estimating your expected proceeds.

CONCESSIONS TO BUYER
If your purchase agreement includes seller concessions, such as a contribution toward the buyer’s closing costs, repairs, or other allowable expenses, those amounts will generally be deducted from your proceeds.

HOME WARRANTY
You may also decide to provide a home warranty for the buyer as part of the transaction. Costs depend on the provider, coverage, and term. If you’d like a better understanding of when offering one might be worthwhile, this article about a home warranty can help.

REAL ESTATE AGENT COMPENSATION
Any real estate brokerage compensation you’ve agreed to pay in connection with the sale will also be included in your closing figures. The amount and structure are determined by the applicable agreements. For some additional perspective on the expenses involved in providing real estate services, take a look at “How Much Money Real Estate Agents Really Earn.”

That may sound like a lot of possible expenses, but not every cost applies to every sale. Your actual closing costs will depend on your location, the terms of your agreement, your mortgage payoff, taxes, concessions, real estate compensation, and other transaction-specific details. The important thing is knowing which ones apply to you and what they mean for the amount you can expect to receive.

Online seller cost estimators can give you a general starting point. For example, this estimator allows you to enter information about your sale and see how different expenses may affect the final number. It can be useful for early planning, but it’s still an estimate. As your sale progresses, the actual transaction figures will give you a much clearer picture.

You shouldn’t have to arrive at closing and simply hope the numbers make sense. Part of my job is to help you understand the financial side of your sale along the way. I’ll help you identify the costs that apply, explain anything that isn’t clear, and show you how those expenses affect your expected proceeds. That way, when you see the final figures, they won’t just be numbers on a page — you’ll understand how we got there.