How much are closing costs for home sellers?

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The buyer may be the one footing the bill for the purchase of a home, but that doesn’t mean there aren’t any costs involved for the seller. If you’re on the selling side of the transaction, here are the closing costs to consider.

What are closing costs for sellers?

For sellers, closing costs are all of the fees associated with completing the sale and transfer of a home. How much you’ll pay in closing costs varies by state and with each transaction, but they typically come out anywhere from 2 percent to 7 percent of the home’s sale price.

In 2019, the average closing costs for a single-family home were $5,749, and included both a lender’s and owner’s title policy, an appraisal, recording and settlement fees, a survey cost and transfer tax, according to ClosingCorp.

In addition to these fees, real estate commissions are also paid at the closing — usually by the seller — and typically account for 6 percent of the home’s sale price, although commissions have been trending downward. For a $250,000 listing, a 6 percent commission would equal $15,000. The buyer’s and seller’s agents typically split the 6 percent fee down the middle.

Buyer vs. seller costs: Who pays for what?

Both homebuyers and sellers pay closing costs. The buyer is usually the party responsible for the bulk of closing fees, but it’s a common negotiation practice to have the seller pick up the tab by offering a credit for some or all of the buyer’s closing costs. The buyer’s closing costs might include:

  • Attorney fees
  • Application fees
  • Appraisal fees
  • Bank processing fees
  • Credit report fees
  • Home inspection fees
  • Notary fees
  • Recording fees
  • Title company fees
  • Title insurance policy

The seller’s costs might include:

  • Payment for the balance of the mortgage
  • Property transfer taxes
  • Recording fees
  • Attorney costs
  • Any liens that exist on the property
  • Real estate commission

When are closing costs due?

Closing costs are due when you close on the sale of your home — the final step before you hand over the keys to the buyer. You will pay these fees when you and the buyer meet with the closing agent, title company and/or attorney to disburse the funds and sign documents to complete the sale.

The law requires that both the buyer and seller receive closing documents that provide the details of the transaction at least three business days before closing. These documents include an itemized list of closing fees. 

How to reduce closing costs 

The good news for sellers is that closing costs usually come out of the proceeds they receive from the sale, so you probably won’t have to come up with extra cash out of pocket if you’re on the listing side of things. There are a few ways, though, that you can try to lower fees:

  • Ask your real estate agent to take a lower commission, or work with an agent who offers discounted services. Keep in mind that with this route, you may receive less in the way of marketing than you would with a typical agent.
  • Consider selling your own home. Acting as your own agent, known as listing for sale by owner or FSBO, can help you avoid paying commission and hang onto that portion of your home’s sale price.
  • See if the buyer will pay for closing costs, or, raise your home’s purchase price and agree to pay the buyer’s fees.
  • Negotiate better terms from your real estate attorney or title company.

Keep in mind that your closing costs are in addition to the other costs of selling a house, including home repairs, staging costs and mortgage payments if you buy another house before your previous one sells. You may also be responsible for capital gains tax on the sale, which can impact your bottom line overall.

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