When home sellers set out to calculate their home sale’s probable proceeds, they often forget to factor in closing costs. Closing costs are an assortment of expenses—aside from agent commissions—that both buyers and sellers have to pay at the close of a real estate transaction.
In this blog, you’ll learn everything you need to know about closing costs.
Closing Costs for Sellers
On average, closing costs for sellers range between 8% to 10% of the home’s final sale price,
or around $19,000-$24,000, based on the median U.S. home value of $244,000 as of December 2019.
Seller closing costs are made up of many fees. Here’s a quick breakdown of potential costs and expenses:
- Agent Commission:
If you’re selling a property, you generally pay commission to both your listing agent and the buyer’s agent when your home sale closes. Usually, real estate commission is 5%–6% of the home’s sale price. However, this is not a set amount because the commission is negotiable between the seller and the agent.
- Negotiating Real Estate Commission
Since there aren’t laws or regulations in the U.S. dictating commission rates, real estate commissions are negotiable. Your agents may be willing to negotiate a lower rate depending on the type of transaction, the required services, and the relationship.
You have more chances of getting a reduced commission if the agent represents you for two transactions- your current home sale and the purchase of the new property.
FSBO
If you’re looking for ways to cut costs, you always have the option to list your home on your own. FSBO (For Sale By Owner) is only a good idea if you have the knowledge and experience to take care of all contracts and paperwork.
By selling your home yourself, you’ll save the 3-4% you would have to pay to your listing agent, but all the work and legal responsibilities will fall on you. Take into account that you’ll still have to pay for p the buyer’s agent’s commission.
Although you get to save thousands of dollars on commissions, selling your home yourself is time-consuming and tends to receive lower offers than conventional home selling processes.
Discount agents
Discount agents charge lower commission rates but tend to offer limited assistance and fewer services than traditional listing agents. For example, their packages may include listing your property on the local MLS but without marketing it. Other discount agents offer different packages where you choose only the services you need.
- Transfer Tax
The transfer tax, title fee, or government transfer tax are the taxes you’ll pay when the property’s ownership or title passes from one individual or entity to another. Since each state charges this tax, it varies a lot depending on where you live.
- Title Insurance
Title insurance protects the lenders and buyers from financial loss due to issues with a property’s title. Unlike standard insurance, which protects against future events, title insurance protects against claims for past occurrences, including back taxes, liens, and conflicting wills.
- Escrow and Closing Fees
Escrow is a legal agreement in which a third party holds money or property until the purchase agreement is completed. Escrow providers can either charge about 1% of the home sale or a flat fee, ranging between $500 and $2,000, depending on where you live. Escrow fees are usually split 50-50 between seller and buyer.
- Prorated Property Taxes
Sellers are responsible for prorated property taxes due to the home sale date when the buyers take over.
- HOA Fees
If your property is part of a homeowner’s association (HOA), you likely pay monthly, quarterly, or yearly fees. When selling your home, you’ll have to ensure you’re up to date with all payments. Many HOAs also charge a transfer fee to transfer your home to the new owner.
- Credits Toward Closing Costs
If you’re selling your home in a buyers market (where listing outnumbers buyers), you might want to offer closing credits as an incentive for the buyer.
- Attorney’s Fees
In Florida, state law requires a real estate attorney present when a home is bought or sold. Buyers and sellers tend to pay the lawyer, at closing, out of the sale proceeds.
Sell to We Buy Houses Companies and Avoid Paying Closing Costs
If you want to avoid spending thousands of dollars on closing costs and agent commission, selling to Home Buying Companies might be your best choice. We buy houses companies
typically have the cash ready to make you an offer, and take care of all the paperwork and fees.
Henry Buys Homes: Your Top Choice
Are you thinking of selling your home? At Henry Buy Houses we buy houses fast and for cash.
Contact us today to get a fair, no-obligation cash offer for your home.