Both buyers and sellers must pay closing costs when finalizing a property sales transaction. Sellers may have to pay closing costs of 8-10% of their property’s sale price, in addition to any debts or liens.
A lower commission is one way for sellers to cut down on closing costs. Clever Selling House’s friends match you with top-rated agents in your area for a low, pre-negotiated rate of $3,000 to 1% of the property value. This will save you thousands.
Clever helps you connect with top-rated local agents who provide full service support at low rates starting at $3,000 to 1%. Buyers get 0.5% cash back.
This guide will help you understand the closing costs of sellers. It will also show you how to lower them.
What are the closing costs for sellers?
A typical home sale will see the seller paying between 8-10% and 10% in taxes, settlement fees, or other closing costs.
Here are the closing costs you might owe depending on how much your home sells.
Seller closing cost calculator
This seller closing cost calculator will help you estimate the amount of taxes and fees you’ll have to pay when you sell your house. These default values are based upon national averages. The location you sell will affect the fees you pay.
The closing costs for your house sale will differ depending on where you live. Also, how you split them with the buyer depends on local conventions. You can ask your realtor to help you determine what fees and taxes are your responsibility. Looking to sell your house fast for cash? We beat the other guys’ offers this article
Realtor commission fees
The most costly closing cost for sellers is the realtor commission. This is a reward to both your agent and the buyer’s agent for helping them sell their home. The average realtor fee is 5.5% of the property’s sale price — which can often be more than all your closing costs together!
Because realtor fees are such a large percentage of your sale proceeds it is worth shopping around to find a lower rate. This could help lower your closing costs by thousands of dollars.
Clever Selling House is a discount selling house company that can help you save money on realtor fees. Clever’s free service matches your needs with top-rated agents from respected brokerages such as Century 21 or RE/MAX. Exclusive, pre-negotiated listing fees are available for as low as $3,000 and as high a 1%. Clever could save you $8,000 on a $400,000 sale of a home.
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Transfer taxes and recording charges
Recording fees and transfer taxes — also known as recordation, documentary or conveyance fees — are costs that are associated with the legal ownership of the property being transferred to the buyer. These taxes may be paid to your local municipality or county (or both).
On average, Selling House transfer taxes are 0.44%. Recording fees, however, cost 0.04%. Rates can vary greatly between areas. Some areas don’t have transfer taxes. However, in some cities they can add up to 5% of the sale price.
Transfer taxes are paid in different ways depending on where you live. They may fall under the control of the seller or buyer, depending on the local conventions.
Title insurance
The owner’s insurance covers the buyer for any unforeseen legal issues that may arise from the title of the home, such as outstanding liens or delinquent property tax.
The cost of title insurance is very affordable. The average cost of title insurance is 0.16% of the national sale price, though rates can vary from one state to another.
In many states, the buyer is responsible for purchasing owner’s title insurance. However, in certain areas, the seller may be able to pay the cost of the policy.
Property taxes
Sellers must also pay any property taxes unpaid in addition to Selling House transfer taxes. Most cases your tax bill will only be prorated for the period you owned the property. If you own the property for half the year, then you will owe half the annual property taxes. The remainder would fall on the shoulders of the new owner.
Some local governments will charge all property taxes for the year to the owner of the property on a particular date. For example, January 1. If this is the case in your locality, you will owe the entire year’s property taxes even if your home is sold early in the year.
Homeowners Association fees
You may be required to pay prorated dues if you are a homeowner association (HOA) member. Check your HOA agreement for details.
Escrow charges
There are many service fees associated with closing the sale, including escrow fees. Also known as settlement fees or closing fees. The title or escrow company that handles your closing will prepare the documents, deduct closing expenses from the sale proceeds and then disburse funds on your behalf.
The escrow fees are split in half for most areas. Settlement companies usually charge a flat fee plus a small percentage from the sale price. An escrow company might charge $1,000 plus 0.2% of the property’s sale price. This adds up over $300,000.
For conventional transactions, escrow fees typically amount to about 1-2% of the transaction price. However, fees can vary depending on which services are provided and the complexity of each sale.
Attorney fee
An attorney is required to close a Selling House transaction in some states. Even though an attorney is not required by law, it’s a good idea for an attorney to review closing paperwork. This is especially true if there are complicated legal issues like estate sales or outstanding liens.
Flat fees for selling house attorneys can range from $800 to $1500. Other attorneys charge between $150 and $400 an hour.
Did the seller ever pay closing costs for the buyer?
Sometimes sellers will agree to pay a portion to the buyer’s closing costs in order to close a deal. This is called a seller concession.
The buyer’s closing cost responsibility is negotiable. Offering to pay the buyer for their closing costs may be a bargaining chip. Sellers can pay closing costs out of the proceeds of the sale, but buyers will have to pay them out of their own pockets. A buyer’s fee is usually 2% to 3% of the home’s price. This makes it more affordable and may allow you to negotiate a lower sale price.
Will the buyer be able to pay the closing costs of the seller?
If both parties agree, the buyer may pay the seller’s closing cost. This is not a common practice, however.
Home sellers almost always pay closing costs out the proceeds of the sale, but buyers usually pay them out of their own pocket. The buyer must bring lots of cash, in addition to their down payment for the mortgage. The seller may ask the buyer to pay the closing costs. This could make it impossible to purchase the property.
How can you save on closing costs
There are many ways to cut down on closing costs. Depending on your stage in the home-selling process, you may be able to save as much as you like.
Selling with a low-commission realtor
Selling your house to a low-cost realtor is the best and most efficient way to make more money at closing.
The selling house commission is the largest closing cost when you sell your house. Sellers can save a lot even if they get a slight discount.
Top discount Selling House companies offer the same support and service as traditional realtors, but they charge less than the 3% listing fee many agents charge.
Clever Selling House, for example, pre-negotiates exclusive discounts with top local realtors. Clever allows you to sell your home with a full-service agent at a flat $3,000/1%. This will save you thousands in closing fees.
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Clever’s friends negotiate low listing fees with top-performing agents at 1% to $3,000 so that you don’t have to. Today, you can save thousands on realtor fees!
Talk to the buyer
After you have hired an agent, you can save money on closing costs by negotiating with buyers. Sellers have great bargaining power in hot housing markets. It is possible to negotiate with buyers to pay a higher percentage of the total closing costs than buyers in your local area.
This is not the best strategy to maximize your home’s sale profits. Closing costs are usually paid out of pocket by buyers, who may not have much cash. Buyers will often be able to pay a higher price for their purchase than they would have to pay additional closing fees.
Compare prices on closing fees
You may be able shop around to find lower closing costs as your closing date nears. Savings may not be possible due to the effort and time involved, especially during a hectic time when you are selling your home.
You may be too busy juggling repairs requests and inspections, as well as preparing for your move, to make time to call several settlement companies in order to save $100 on title services.
Here are some proven ways that you can save closing fees if your time and energy allow.
Request a Reissue Rate on Title Insurance
If you are responsible for purchasing title insurance, and the property has been yours for less than 10 year, you may be able to save money on the seller closing costs by asking for a reissuance rate at the title company that underwrote the current policy. The buyer would keep the same title insurance as its seller.
Title insurance can be as low as 40% with the reissue rate. These savings sound amazing, but title insurance is still relatively affordable. A typical title insurance package can save you 40% on the cost of your home. That’s just $180 for a $300,000.
Search for escrow services
Typically, the cost of escrow is around 1% of purchase price and is split equally between buyer and seller.
Most home sales involve the buyer choosing the escrow company. This is usually done based on the recommendation of their agent or lender. Sellers can look for low-cost escrow companies and recommend them to buyers.
You can save around 0.1% on your home’s purchase price if you find an escrow company that charges 20% less than the fees. That is $300 for a $300,000.
Search for a Selling House attorney
Some states require selling house attorneys. They are highly recommended for complex transactions. You can save hundreds by shopping around for a Selling house attorney.