Unpacking the Hidden Costs: A Guide to Closing Costs When Selling Your Home
Closing costs can be a significant expense for a home seller, and it's important to understand what costs you may incur when you sell your home. In this blog post, we'll go over the typical closing costs that you can expect to pay when you sell your home.
Commission to the Real Estate Agent The most significant cost a seller will incur when selling their home is the commission they pay to the real estate agent. The commission is typically a percentage of the sale price, and it is paid at closing. The average commission rate is between 5 and 6 percent, but this can vary depending on the market and the agent's experience.
Title Search and Insurance Another cost that you will incur when selling your home is the title search and insurance. The title search is an investigation of the property's title history to ensure that there are no liens or encumbrances that could affect the sale. Title insurance is a policy that protects the buyer and the lender in the event that any title issues arise. The cost of the title search and insurance is typically split between the buyer and the seller.
Escrow Fees Escrow fees are paid to the escrow company that is responsible for handling the closing process. These fees cover the cost of processing the paperwork, ensuring that all the necessary conditions have been met, and distributing the funds to the appropriate parties.
Transfer Taxes In some states, transfer taxes are assessed on the sale of a property. These taxes are based on a percentage of the sale price, and they are usually split between the buyer and the seller.
Homeowner Association Fees If the property being sold is part of a homeowner association, the seller may be responsible for paying any outstanding fees for the current year.
Home Warranty Some sellers offer a home warranty to the buyer as part of the sales agreement. The cost of the home warranty is typically paid by the seller, but it can be negotiated as part of the sale.
In conclusion, there are several closing costs that a seller can expect to pay when selling their home. It's important to understand these costs and to budget accordingly. Working with a real estate agent who has experience in the local market can help you get a better understanding of the costs associated with selling your home and help you negotiate the best possible deal for you.
If you're considering selling your home, consider working with Cash Now Homes, where we help our clients get a fair offer and simplify the sales process.