Closing costs can vary from 4-10 percent of the sale of your home, depending on your contract, location, and other factors. This means if your closing costs are six percent you may pay an additional fee of $21,000 for a $350,000 home.
Are you looking to sell your house this year? If so, you are probably wondering how you can save on home seller closing costs. Keep reading to learn how you can get the most out of selling a home by finding ways to save on home closing costs.
Seller’s Fees at Closing
Part of the cost of selling a home is paying all the closing fees. Wondering what is included in closing costs? Here are some of the common fees for the cost of selling a home.
Real estate commission pays both your real estate agent and your buyer’s agent for the property sale. It is usually the highest fee in the closing costs. Realtor fees average around 5.5 percent of the home’s sale price—more than all the other fees combined!
On top of real estate transfer fees, the seller also must pay any unpaid property taxes. Your tax bill will be prorated to pay the portion of the year you owned that property.
Some local governments may charge the full annual property tax bill to the person owning that property on a specified date (like January 1), so you should definitely check this out when selling your home.
Recording Fees and Transfer Taxes
The recording fees and transfer taxes are the costs of transferring the property to the buyer. You also have to pay taxes to your local government and county depending on where you live.
Transfer taxes tend to average around 0.45 percent nationally. Recording fees average 0.04 percent. In some states, there is no charge to transfer taxes, but some cities charge up to 5 percent of your home’s sale price.
It can vary on the responsibility to pay these transfer taxes. The buyer or seller may have to pay these fees.
Owner’s Title Insurance
This saves the buyer from unanticipated legal problems with the home’s title from the previous owner. This can include things like outstanding liens and unpaid property taxes. The average cost is around 0.16 percent of the sale price.
In many areas, however, this is the buyer’s responsibility. However, the seller does pay this cost frequently.
Also known as closing fees or settlement fees, escrow fees include a range of service charges to finalize the sale. The title or escrow company will oversee your closing and prepare needed documents. In most cases, the seller and the buyer will split the total escrow fees.
The title company charges a set fee along with a small percentage of the home’s sale price. Escrow charges typically add up to about 1 to 2 percent of the home’s sale price for typical transactions. More complex sales can have different fees.
Homeowners Association Fees
If your home is in a homeowners association (HOA), you may need to pay a portion of the dues or the entire amount depending on when you close the sale. Check the agreement for specifics.
Seller’s Attorney Fees
Attorneys perform real estate closings in some states. Even if there is not a requirement, you may want an attorney to check your paperwork, particularly if it is an estate sale or has outstanding liens.
Most attorneys charge a set fee, but others charge hourly rates.
Ways to Save on Home Seller Closing Costs
Now that you understand the most common parts of the closing costs, you probably wonder what you can do to save money. Here are a few ways to save.
1. Sell With a Low Commission Realtor
As mentioned above, real estate agent commission is the largest fee in your closing costs. One of the best ways to save money on your home closing costs is to work with a low commission realtor.
You can also try selling your home yourself or look for brokers to buy your home. We buy houses for cash if you want to skip the real estate agent altogether and get an upfront offer.
2. Shop Around for Title and Settlement Services
If you want to see if you can find lower settlement and title providers, make sure you do this quickly. These firms need ample time to prepare and research documents.
Your lender may work with a company for a volume discount, but you can also ask your friends and family for referrals along with doing your own online research to find the best deals. You could save hundreds of dollars.
Make sure you get an itemized quote from all companies so you know that the quotes are comparable. Low fees aren’t everything, and you want to make sure you find the best service. Be sure to look for recommendations along with lower costs.
If you are using a real estate attorney, you can also shop those fees as well to save some money.
3. Negotiate With the Buyer
In a seller’s market, you may have some power to negotiate. You may be able to ask for the buyer to cover a larger portion of the closing costs to help close the deal.
However, you have to keep in mind that buyers typically pay closing costs outside of their mortgage, so they may not have as much cash. You may find it easier to keep the higher sale price than have the buyer pay for more closing fees.
Know the Cost of Selling a Home
If you are looking to move, it’s important that you take the time to understand your home seller closing costs. This will help you get the most from the sale of your home so you can move to your dream home or downsize. Use these tips to help you get the most money in your pocket from the sale.
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Read Also: 9 Common Reasons for Selling Your House