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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
About Closing Costs for Seller
What is it going to cost to sell your home? Well if you are planning to sell your home you might as well know if there are any costs involved so that you are prepared for them.
Most of the sellers are unaware of the closing costs and also possible credits that they may receive when they are selling their home.
In this post, we will understand what are closing costs for sellers and know more about them.
What are the seller closing costs?
Seller closing costs are the cost that is incurred in property transactions which are paid by the seller at the time of selling his house.
Closing cost for sellers includes fees and taxes that they have to pay at the end of the real estate transaction.
Let us see what are the types of seller closing costs.
1 - Government Recording / Transfer Charges
The first one is the government fees. Everyone is going to be charged with government fees.
Your real estate agent or the title company would not be able to adjust them, they are straight from the government.
These fees could be different for different counties or states based on the area in which your property is located.
So check with your realtor and title company before you get a number in your head for seller paid closing costs.
2 - Commission
The second part of closing costs for seller is the realtor commission. Each broker will charge a percentage for the sale of the property.
For example, if you are selling your property for $150,000 and the brokerage charged by the realtor on that is 3%. The total commission that you would be paying for this transaction would be $4,500.
Some agents will be charging a static fee for the brokerage. This fee could vary according to the realtor and the area that your property is located in.
3 - Title Charges/ Lender Payoff / Prepare Release
The next sellers closing cost is going to be title charges. In many states, the title company works on behalf of the buyer, however, they would be doing some duties for sellers as well.
Hence there would be some fees attached to your transaction. If you have a mortgage on the house that you are selling you will be paying the title company a couple of hundred dollars to get a release on that mortgage.
The title company will be contacting your bank, collecting the money at settlement, and paying off your loan.
If you don’t have a mortgage on the house you are selling, this fee would not be included in your seller paid closing costs.
At your settlement, there could be charges collected from you for the bills that are not due.
For example, water bill, HOA, etc. for the resources that you have used which are usually on a pro-rata basis.
4 - Seller Contribution
The other big part of seller closing costs is the seller contribution. This is the one fee that is not required for you to pay.
However, you may come up with the buyer who is requesting the seller’s contribution.
At the time that they write the offer, they might request from you to pay a certain amount or a percentage towards their closing costs.
The seller contribution is often 3% of the sales price, however, it could vary depending on your contract negotiations.
5 - Seller Closing Costs Credits
When you pay your taxes ahead of time, maybe six months to a year depending on the state, you will receive credit for the amount of taxes that you have paid in advance.
For example, if you have your taxes due in December and you are selling your property in November.
You have already paid taxes till November, you will see a credit for taxes from January to November on your settlement sheet at the time of closing.
The same goes for HOA if you have made a payment for a whole year and only used six months, you will see a credit for the remaining six months that you haven’t used on your settlement statement.
Conclusion
If you reach out to a realtor in your area, they will be happy to go to a title attorney and get you a settlement estimate, prepared as per your property price, and your taxes with the credit that you may receive on your seller paid closing costs.
Your intention to sell your property is to walk away with as much as cash you can after the closing.
Your trusted real estate agent should be the one to help you achieve that goal with a minimum closing cost for seller.
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