Do You Know About These Unexpected Seller Closing Costs?

Estimated reading time: 4 minutes

Closing costs aren’t limited to buyers. Sellers will also have some closing costs, and these can vary depending on the location and the transaction specifics.  As a seller, you will receive a statement prior to the closing with the details of what charges will be levied. This document will help you better understand how the final costs have been reached and why you will pay specific fees, while this article lists the more common closing costs that you can expect to pay.

At closing, the seller will usually receive a check or a wire transfer of the purchase price less the remaining balance on any associated mortgages, the closing costs and recording fees, and the agent’s commission fee. These fees may include:

PRORATED TAXES
These are usually property taxes but can be any variety of local or state taxes, such as sewer and water fees, which may not be included in the regular property tax bill. Taxes are typically prorated based on the days that you own the property during the respective tax or fee time frame.  If your taxes were held in an escrow account as part of your mortgage, these funds will be applied first to the outstanding tax amount due before being deducted from the purchase price.

HOME OWNER ASSOCIATION (HOA) FEES
If your home is part of an HOA, the fees are also usually prorated based on the days the seller owns the property during the tax or fee period. These can vary from a few hundred to a few thousand dollars.

TITLE INSURANCE
In most states, sellers typically pay for title insurance that protects the buyer and lender against any claims or liens against the property. However, in a few states, it is paid by the buyer instead. This will be specified in the closing disclosure for your review.

RECORDING FEES
In most states, the local government charges recording fees to record the transfer of ownership and any mortgage documents.  Compared to other closing costs, these are minimal fees and usually cost around $125-150.

TRANSFER TAXES
Some states and municipalities impose transfer taxes above and beyond recording fees. Transfer tax amounts vary, but a percentage of the property’s sale price is not uncommon.

ATTORNEY FEES
In some states, an attorney may be hired to represent you during the closing process or even act as a closing agent. As with most fees associated with a home sale, attorney fees can vary and will also be deducted from the overall proceeds of the sale.

CONCESSIONS TO BUYER
If you gave any concessions to the buyer, such as additional funds to cover buyer closing costs, monies toward repairs revealed during an inspection or appraisal, or promised monies for home improvement, these funds will also be deducted from the purchase price.

HOME WARRANTY
Sometimes, a buyer’s home warranty may be included as an incentive to entice potential buyers. A home warranty can range in cost from $300 to over $1000, depending on the coverage and term.

REAL ESTATE AGENT COMMISSION
Besides a mortgage payoff, the commission paid to a listing agent’s firm is usually the highest cost for a seller and will also show as a debit. Keep in mind that, as your agent, I will have my own costs and fees to market and sell your home. “How Real Estate Agents Get Paid” may help you understand what the agent may receive as compensation.

In summary, the list of possible seller closing costs may be pretty long, and they do vary from state to state. Overall, sellers can expect to pay 8%-10% of the sale price in commissions and closing costs, but the actual costs will depend on the negotiated contract and the location.  As noted in these brief descriptions, the costs associated with each item can vary a lot, and many of them are negotiable.

There are also dozens of cost estimator tools on the Internet and they vary in detail as well because, after all, every home sale is unique in its own way. For example, this estimator assumes a 5.28% commission to the listing agent, but it does allow you to plug in the actual commission amount based on your listing agreement with me and the agreed-upon purchase price in the finalized purchase agreement.

Working with me as your trusted real estate agent, I will make sure that you understand the details of the closing costs associated with the sale of your home. While there will be a settlement agent at the closing to walk through all of the documents and details, I will also be there with you at the closing table to ensure that the closing costs and calculations are correct because I want you to walk away as a satisfied home seller!