What Closing Costs to Expect When Selling a Home

Closing costs are like the forgotten stepchild in the real estate transaction. Buyers concentrate on the down payment and the purchase price while sellers envision the check they’ll receive at the closing table.

Lots of people, however, have their hands out, expecting to be paid for their services, and they will get their pound of flesh at closing. In all fairness, it takes a village, all working together, to bring a real estate transaction to a successful close. None of the villagers, by the way, works for free.

Seller’s Closing Costs

The closing process is simpler for the seller than the buyer, yes, but not less expensive. In fact, expect to pay up to 6 percent (or more in some areas) of the purchase price at the closing table. Now, closing costs vary, depending on where you live, but here’s a short list of what you may be required to pay out of your proceeds from the sale of the house:

• Loan payoff

• Pre-payment penalty (if your loan has one)

• Recording fees

• Title insurance fees

• Attorney’s fees, if you use one

• Liens against the home

• HOA fees and dues in arrears

• Real estate commissions (for both your broker and the buyer’s)

• Pro-rated bills, such as utilities and sanitation.

• Pro-rated property taxes and insurance (property taxes are pro-rated to the date of recordation)

• Transfer taxes, if required in your region

• Any credits granted to the buyer

Again, the total amount deducted from your proceeds will vary depending on various factors.

If You Have an FHA Buyer

FHA requirements dictate which closing costs buyers will pay, and the tax service fee is one that the seller is on the hook for. Although this isn’t a large expense, it is typically not found in a conventional loan closing.

FHA also has different appraisal requirements, and if your home doesn’t satisfy these safety and security standards you may be required to make repairs before the loan can close.

For more detailed information, you can read the Department of Housing and Urban Development’s Guide to Settlement Costs on HUD’s website.