What you need to know to help you better prepare for a successful sale.
When it comes to real estate transactions, both sellers and buyers are responsible for certain closing costs. Today, we’ll break down the typical closing costs sellers can expect to encounter when selling their home. Understanding these costs can help you better prepare for a successful sale.
1. Agent commissions. One of the most significant expenses for sellers is agent commissions. The amount can vary widely, depending on your home’s sale price and the agreement you have with your listing agent. It also includes any commission you agree to pay to the buyer’s agent, who represents the purchaser of your home. It’s essential to discuss these commissions and reach a clear understanding with your real estate agents.
2. Revenue or deed stamps. Sometimes referred to as transfer fees or excise tax, revenue or deed stamps are fees charged by the Register of Deeds when transferring property ownership from one owner to another. The cost is calculated at $2 for every thousand dollars the home sells for, making it easy to estimate. Alternatively, you can divide your sales price by 500 to determine this expense.
3. Deed preparation. Deed preparation is a straightforward cost associated with transferring ownership from the seller to the buyer. Typically, the buyer’s closing attorney handles this task to streamline the process, but sellers can choose to hire their own attorney for deed preparation if they prefer.
4. Payoffs of open loans. Sellers must pay off any outstanding loans tied to the property, such as mortgages or equity lines. Failure to do so can prevent the buyer from receiving clear title to their new home, so this is a crucial expense to settle before closing.
5. Prorations. Prorations involve the pro-rated payment of annual property taxes and other seller duties. The seller pays a portion for these items until the day of closing. If you’ve already paid these obligations in full for the year, you’ll receive a credit for the days you no longer own the property during that year.
6. HOA transfer fee. If your property is part of a homeowners’ association (HOA), you’ll likely encounter an HOA transfer fee. This administrative fee ensures that you’ve fulfilled all your dues and removes your name from the association’s records.
7. Buyer’s closing costs. During contract negotiations, sellers may agree to cover some or all of the buyer’s closing costs. These costs can include allowances provided in place of repairs or addressing appraisal deficiencies.
8. Miscellaneous attorney’s fees. Sellers with open loans on the property may incur miscellaneous attorney’s fees. These fees arise when the attorney needs to pay off loans by transferring the mortgage payoff funds to the lender.
While these are the typical closing costs you can anticipate as a seller, there may be additional expenses depending on your specific situation. If you have any questions or need more information about the costs that may apply to your sale, don’t hesitate to reach out for clarification.
Selling your home involves navigating various financial aspects, so being well-informed about the closing costs can help you plan effectively and make the process smoother. If you have any more questions or need guidance specific to your situation, feel free to message us for assistance. We’re here to help you make your home sale a success!
