What Closing Costs to Expect When Selling a Home

closing costs when selling a home
November 4, 2020

What Closing Costs to Expect When Selling a Home

When selling a home, your primary focus is always on the amount of profit you are going to pocket after the sale. Therefore, it is crucial to understand the type of costs you are likely going to meet at the closing table to avoid unpleasant surprises. The good news is that you will not need to pay any cash when you have enough equity as it will be deducted from the profit you make. Let’s take a quick look at the closing costs you should expect when selling a home.

Closing Costs to Expect as a Seller In Any Market

Real Estate Agent Commissions

Once you have sold your home, one of the main expenses will be the commission fee — a portion of your earnings that goes to the realtor who helped you seal the deal. Are you wondering if it is worth paying for an agent? The answer is yes! A realtor helps save you a sizable amount of time by giving you the right marketing plan that will get your home sold within your timeline and for the highest possible price.  Need an agent?

Mortgage Balance Payoff

If you owe a mortgage, you will be required to pay off the mortgage balance when you sell the home. Some mortgage lenders may have prepayment penalty fees that you need to pay at the deal’s closing if you clear the mortgage earlier than expected.

Outstanding Amounts Owed on the Property

On top of the mortgage, you may have other dues on your property such as homeowners’ association dues, utility expenses, or condo fees. You will need to clear these fees too at the closing date of your home selling process.

Seller’s Attorney Fees

If you decide to use a real estate attorney for the deal, which might not be needed by your state but is commonly recommended, you will also need to pay for their services. An attorney should be able to quote their price for representing you before you hire them so that this will be a fixed price that you can easily budget for.

Seller Closing Costs That Vary Depending on Local Area Customs

Some closing costs for home sellers vary from state to state or even county to county. Unfortunately, this is an area you lack much leverage to decrease costs since the home is in a set location that can’t be changed. Here are some closing costs that vary by locale:

Transfer Taxes

Different states and counties have set tax rates; sellers are generally taxed on the home sale price. You may check with your state or county or ask your realtor how much you will need to pay for the taxes.

Recording Fees

Recording fees also vary from city to city. As the seller, you are always responsible for any fees linked with the recording.

The Title Insurance Policy

This refers to an insurance policy that seeks to protect the lender against any unexpected ownership claims that may arise with time against the property. The costs of title insurance differ from state to state and are based on the home’s sale price.

Ready to Sell Your Home?

If you are all set to start selling your home, get the ball rolling with a professional real estate agent. They will help you clearly understand the related closing costs so that you know what to expect and we have a network of the top local agents in your area, click here to get started.

Be sure to check out our free home valuation tool if you’re looking to get an estimated value for your home as a starting point in the potential selling process.