If you are selling your home and trying to figure out how much money you will receive after paying of the mortgage, don’t forget to add in the closing cost sellers are required to pay. While buyers also pay closing costs, you’ll see a long column on the HUD-1 Settlement Statement for seller closing costs.
Closing costs for sellers of real estate vary according to where you live, but as the seller you can expect to pay anywhere from 6% to 10% of the home’s sales price in closing costs at settlement. This won’t be cash out of the seller’s pocket; rather it will be deducted from the profit on your home—unless you are selling with very low equity on your mortgage. In this case, sellers may need to bring a little cash to the table to satisfy your lender—and some closing costs may be held in escrow.
1. Seller costs
One of the larger closing costs for sellers at settlement is the commission for the real estate agents involved in the real estate transaction.
Commissions on real estate are negotiable and vary somewhat by market, but a typical commission is 6% of the sales price of the home split between the listing real estate agent and the buyer’s agent.
Buyers have the advantage of relying on sellers to pay real estate agent commissions.
2. Loan payoff costs
Most home sellers often seek out a sales price for their home that will pay off their mortgage and satisfy their lenders.
Your mortgage payoff balance will often be a little higher than the remaining balance on your mortgage and even the buyer’s purchase price. This is because of lenders’ prorated interest on the mortgage.
In some cases, your lender may require you to pay a prepayment penalty for paying off your mortgage loan before the end of the term. If you have a home equity loan or line of credit, in addition to your mortgage, the lender will require this be paid in full at settlement as part of closing costs for the seller.
Be sure to talk to your lender about what will be required to pay off the mortgage so that you get an accurate picture of closing costs.
3. Transfer taxes or recording fees
Transfer taxes, recording fees, and property taxes are key parts of a seller’s closing costs.
Transfer taxes are the taxes imposed by your state or local government to transfer the title from the seller to the buyer. Transfer taxes are part of the closing costs for sellers.
Along with transfer taxes and transfer feeds, property taxes must also be up to date for sellers before they hand over keys to the buyer.
4. Title insurance fees
Title insurance fees are another fee to keep in mind when you sell real estate. As part of closing costs, sellers typically pay the buyer’s title insurance premium. Title insurance protects buyers and lenders in case there are problems with the title in a real estate deal.
5. Attorney fees
If you have your own attorney represent you at the settlement of your real estate sale, the seller may have to pay attorney fees as part of closing costs.
Market traditions vary, so while in some areas both the buyers and sellers have their own attorneys, in others it’s more common to have one settlement attorney for the real estate transaction. In some areas the buyer pays the attorney fees, while in others the seller pays.
Additional closing costs for sellers
Additional closing costs for sellers of real estate include liens or judgments against the property; unpaid homeowners association dues; prorated property taxes; escrow fees; and homeowners association dues included up to the settlement date. These closing costs for a home sale are separate from what buyers pay at closing.
Depending on the real estate contract, closing costs may also include termite inspection and remediation, if necessary; home warranty premium for buyers; and repair bills or a credit to buyers for repairs for items found during a home inspection.
Also, don’t forget to estimate some of the closing costs associated with preparing to sell, such as cosmetic repairs or improvements to make your home more attractive to buyers. Those closing costs may be returned with a higher sales price, but you should still include them in your calculations.
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Linken Investments, Roanoke’s Trusted Home Buyer and Seller
Linken Investments LLC. is a local real estate solutions company based out of Lynchburg, VA. We are Roanoke’s Trusted Cash Home Buyers. We have been buying houses for cash in the Roanoke area since 2005. We are also Licensed Realtors in the state of Virginia. Since we are a real estate investment company as well as a licensed and reputable real estate agent, we have multiple ways we can work with you to sell your home on your schedule and for the highest price. We provide you a way to see all of your options in one spot, letting you choose whether you want to maximize the price of your sale by listing on the Roanoke area MLS or whether selling fast and simply is more important to you.
Our years of experience are one reason clients trust Linken Investments to complete the sale of their Roanoke area property quickly with honesty and integrity. We’re a family-owned business and focus on helping homeowners like you find solutions to your problem whether you’re going through a foreclosure, selling an inherited property, or just need to sell your house fast for any reason. Linken Investments offers you the chance to sell your Roanoke home in a simple, stress-free, cash transaction, or you can list the house with us. We’ll sell your Roanoke area house at the highest possible price with our wide buyer network and the best marketing in Virginia.
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Give us a call or text anytime 540-596-5030 or fill out the short form here today!