As a seller, you have closing costs you must pay. While they won’t be tied to the mortgage itself, like it does for buyers, there are fees for transferring homeownership. How much you pay depends on who you hire to help you with the process.
Do you Need a Realtor?
One of the largest expenses sellers pay is the realtor fees. Typically, 100% of the realtor fees fall on the seller. Buyers don’t pay realtor fees. When you list your home with a realtor, you agree to pay a certain percentage of the home’s sales price. For example, if you agree to pay the realtor 5% of the home’s sales price and the home sells for $200,000, you’d pay $10,000.
Your realtor (the seller’s realtor), will then pay the buyer’s realtor. That’s how the buyer doesn’t have to pay a realtor. The buyer and seller realtor agree on a percentage. For example, some realtors split the deal 50/50, while other listing agents keep 75% of the fee and pay the buyer’s realtor 25%. You don’t have to worry about their agreement – just the amount you agreed to pay the listing agent.
Do you Need an Attorney?
We always recommend that sellers have an attorney represent them. Even if you think everything is ‘fine,’ an attorney can make sure. The attorney will review the purchase contract and give you any advice necessary to protect your interests when selling the home.
Attorneys each have different prices, but typically charge under $1,000. Shop around and see what the average cost is for your area. Of course, don’t just choose the ‘cheapest’ attorney. Make sure you choose a reputable attorney that will have your best interests in mind as he advises the sale of your home.
Do you Have Debts?
Certain debts must be paid before you can transfer homeownership. For example, any liens on the property must be satisfied. Your mortgage will get satisfied as soon as the buyer pays you. The closing agent pays off the mortgage with the sale proceeds first before paying the seller.
If you have any other debts tied to the home, though, you must take care of them. The most common liens are judgments, mechanic’s liens, and unpaid property taxes. The buyer’s title company will do a title search on the property. If they see that there are unpaid liens on the property, they won’t approve the loan to close until you take care of them.
Are the Taxes Paid?
The real estate taxes are your responsibility too. You’ll need to make sure the taxes are paid up for the time that you lived there. Since most counties charge taxes in arrears, you may have to pay a prorated amount of the taxes at the closing. The closing agent will determine how much of the upcoming tax bill is your responsibility and how much falls on the buyer.
You Must Pay the Government Fees
Finally, you must pay the standard government fees to transfer property. Typically, sellers pay the recording fee and the tax service fee. The amount of each fee varies by location and sales price. Talk with your closing agent about the exact costs in your area.
The seller’s fees come directly out of your proceeds from the sale of the home. For example, let’s say you sold the home for $200,000. You won’t get $200,000 in your hand. First, the closing agent will pay off your mortgage. Next, he or she will pay the fees mentioned above. If you agreed to pay any of the buyer’s closing fees too, the closing agent will deduct that amount from your proceeds. The amount that is left from the sale is what you’ll get in hand at the closing.Click to See the Latest Mortgage Rates»