What Closing Costs Do You Pay as a Home Seller?
If you think back to when you purchased your home, you likely remember paying closing costs in addition to your down payment. Now that you’re on the other side and selling the home, you may think the buyer is responsible for all closing costs associated with the property. But as the home seller, you have your own set of closing costs.
Before you put your home on the market, here’s a look at what you can expect to pay at closing.
Real Estate Agent Commission
This is by far your largest closing expense as a seller. Since you’re selling the property, you’re responsible for paying commissions to the real estate agents involved with the sale. This includes your agent as well as the buyer’s agent.
The amount you’ll pay varies. On average, agent commissions are about 6% of the sale price, with your agent getting 3% and the buyer’s agent getting the other 3%. If your property sells for $200,000, you can expect to pay about $6,000 in commissions alone.
The purchase of a property is a major transaction that involves more than a mortgage lender. There’s also the process of transferring the home’s title from one owner to the next.
As the property seller, you’re responsible for paying the transfer tax (also called the recording fee) with your state or local government. This fee varies depending on where you live.
Title Insurance Fees
You’re also responsible for paying the new owner’s title insurance premium. This is different from the lender’s title insurance policy, which is paid by the buyer and protects the lender. Owner’s title insurance, on the other hand, protects the buyer’s investment in the home and is often paid by the home seller.
It is customary to have representation for the closing process, which can be either a real estate attorney or a closing agent. Either way, as the seller you’re responsible for paying the fee charged for this service. These fees can range from $350-$1,000. Sometimes, closing documents must be shipped to another location. If so, you’ll also pay the courier fee.
Depending on your state, selling a home may require a termite inspection, and the sale will likely be contingent on a satisfactory inspection for wood-boring insects. As the seller you’re responsible for this inspection, and for any subsequent treatments or repairs.
Any unpaid homeowner’s association dues and liens against the property must be paid at closing. In addition, you’re responsible for paying any prorated property taxes on the property.
Your closing costs may also include buyer credits. Maybe you agreed to give the buyer a one-year home warranty, or perhaps you’re giving the buyer credit for certain home repairs. If so, you’ll pay this credit at closing.
Selling a home and buying a new one is an exciting time, and Cherry Creek Mortgage offers a wide variety of home loan programs to help you embark on the next phase of your homeownership journey. Give us a call and we’ll happily discuss options that might be right for you.