Any time you’re involved with a real estate transaction—especially a more traditional arrangement, involving real estate agents, attorneys, and mortgage lenders—you can anticipate there being some fees. After all, these professionals who assist in the transaction need to be paid. These fees are often called closing costs, and they are important to consider whether you’re buying or selling.
Today, we’re going to take a closer look at closing costs, specifically from the vantage point of those trying to get their property sold.
And remember: To learn more about the best way to sell a house, you can always request your free SOLD.com report. Claim yours today!
The Seller’s Guide to Closing Costs
With that said, what should sellers know about real estate closing costs?
Who pays closing costs?
Generally speaking, closing costs are the seller’s responsibility. In most real estate transactions, it is the seller who is asked to pay both agents their commissions, as well as to purchase the title insurance, etc.
This isn’t necessarily set in stone. In some situations, sellers can negotiate for the buyer to pay some of the closing costs. This is especially true in a seller’s market, where the buyer has less leverage.
For the most part, though, if you’re the one trying to get your home sold, you can anticipate paying the closing costs.
How much are closing costs?
As for how much sellers can anticipate paying, it varies. However, in most cases, it averages out to between six and 10 percent of the total sale price. This can be a not-insignificant amount, and in some cases can really change the calculus on your profit margin. Definitely take closing costs into consideration as you plan your real estate transaction.
What’s involved in closing costs?
If you’re going to be on the hook for closing costs, you’d probably at least like to know just who you’re paying.
Start with the agents. The seller pays the commission for both the listing agent and the buyer’s agent; the standard rate for each agent is three percent. So, assuming both buyer and seller are working with an agent, you may end up paying six percent of the total sale value.
But remember that this is negotiable, and in some instances an agent may waive part of their commission, for any number of reasons. Also note that, if the seller goes the FSBO route, that obviously allows you to avoid paying the three percent listing agent commission.
In addition to the agents, the seller also needs to pay for title insurance. This is almost always a requirement of the mortgage lender, so there’s not much room to wiggle out of it.
In addition, the seller will typically pay the following closing costs:
- A property or deed transfer tax;
- Recording fees;
- Any outstanding judgments or liens against the property; and
- Any repairs required following a home inspection.
What steps should you take before closing?
One thing we would always recommend is taking the time to read your seller’s contract, which will outline the closing costs in great detail. Additionally, the mortgage lender will furnish you with some final paperwork that provides the exact amount you’ll need to pay.
In some cases, you may need to bring a cashier’s check to cover closing costs; in most circumstances, though, the closing costs are simply taken out of your profit from the home sale.
Learn More About Selling Your Own Property
Closing costs are a critical part of the real estate transaction, though again, there are ways to minimize these closing costs… specifically by selling your own property, without an agent, which reduces the commission’s you pay considerably.
Does that mean going the for-sale-by-owner route is a good option for you? Maybe it does and maybe it doesn’t. The best way to find out is to claim your free seller’s report from SOLD.com.
In this document, you’ll get a customized recommendation for the best way to sell your house and achieve your real estate goals; whether by selling directly to an investor, going the FSBO route, or working with a traditional agent.
Claim your report today and make a fully informed decision about how to sell your house.