What Are the Closing Costs?
What are the closing costs when I sell my house? Traditionally the closing costs were divided between the buyer and seller. However, in today’s real estate market, buyers typically ask the seller to pay the closing costs, including the buyer’s loan origination fee and a one year home warranty. These are, of course, negotiable, but if the buyers’ demands aren’t met, some will just move on to the next house on the market to see if another seller is more motivated.
What are the closing costs?
Commissions
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.
For a $350,000 purchase price, the real estate agent’s commission would come to $21,000. Buyers have the advantage of relying on sellers to pay real estate agent commissions.
Loan payoff costs
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.
Transfer taxes or recording fees
Transfer taxes, recording fees, and property taxes are key parts of a seller’s closing costs.
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.
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.
Attorney fees
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 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.
Terra Firma Property Solutions, LLC, is a professional, full-service real estate solutions firm. We will calculate a fair cash offer on your house and get it to you in the next 24 hours. In the event you like the offer we give you, we can close at a time you choose and we’ll even pay all of the closing costs for you. It really is that simple.
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We buy and sell properties throughout the greater Kansas City area. We specialize in buying distressed homes, then renovating and reselling them to home buyers and landlords. Terra Firma Property Solutions is excited to be part of the economic rejuvenation of Kansas City and its surrounding areas.
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