If you’re selling your home, you (hopefully) stand to make a pretty good profit – but you do need to be aware that you’ll be responsible for closing costs. Closing costs can make a dent in your profits when you sell, so what can you expect? This guide explains.
5 Closing Costs That Will Make a Dent in Your Profits When You Sell Your Home
Closing costs generally run between 2 and 10 percent of a home’s sales price. That’s a pretty big range, so here’s what you may be in for:
- Attorney’s fees
- Loan payoff costs
- Real estate commissions
- Title insurance fees
- Transfer taxes or recording fees
Here’s a closer look at each.
Seller Closing Cost #1: Attorney’s Fees
If you have your own attorney representing you during your transaction, his or her fees are part of your closing costs. The amount will vary based on the complexity of your transaction and how much your attorney charges; some charge flat fees, while others charge an hourly rate.
Seller Closing Cost #2: Loan Payoff Costs
Your mortgage payoff balance will probably be a little higher than your payoff quote thanks to prorated interest charges. Additionally, if your lender charges an early payoff penalty, you’ll be responsible for paying that, as well. These are part of closing costs and must be taken care of before you can transfer ownership to your buyer.
Additionally, if you have a home equity line of credit, or HELOC, you’ll have to pay it off before you can sell your home.
Seller Closing Cost #3: Real Estate Commissions
Real estate commissions are split between the agents and brokers handling your real estate transaction. Commissions generally run around 6 percent of your home’s sales price, and they’re the seller’s responsibility. For example, you can expect to pay $6,000 on every $100,000 in your home’s value.
Seller Closing Cost #4: Title Insurance Fees
Title insurance protects a buyer’s lender from someone coming along and claiming ownership in the home in the future. Sellers often pay this fee for buyers – but it’s not a requirement. If you do (or don’t) want to pay your buyer’s title insurance fees, you should discuss the way you feel with your agent.
Seller Closing Cost #5: Transfer Taxes or Recording Fees
State and local governments charge transfer taxes or recording fees when they transfer the title of a real estate property from one owner to another. Your REALTOR® will be able to tell you about these common fees – and how much you can expect to pay.
Are Closing Costs Negotiable?
Some closing costs are negotiable. Talk to your REALTOR about ways you can save money on closing costs – it may be possible to save a few hundred dollars in various areas.
When Do You Pay Closing Costs?
You pay closing costs on the day you sign over your home to someone else. Generally, you must handle all the closing costs before the buyer can accept the property.
Do You Need to Talk to a Boston REALTOR About Selling Your Home Fast?
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