How Much Are Closing Costs for the Seller

If you are planning to sell your home, one of the things that you might be focusing on is the amount of money that you can expect out of the sale, often forgetting to enter the closing costs in the picture. A number of reasons can be behind this. For one, the closing costs typically come toward the end of the sale, and most of the time, it is not clear what exactly it is that you are paying for.

Closing – What is It?

Closing refers to the phase within the process of selling a home when both money and selling documents have been transferred so as to transfer the property ownership to the buyer. When the closing is successful, both the buyer and the seller agree and fulfill all the agreements stipulated in the contract. The seller will have to pay all of the property loans off in order to clear the title, while both the buyer and the buyer’s lender will transfer the money so as to cover the balance that is owed during the purchase.

Most often, the closing process is handled by a third party, often called as an escrow company, which makes sure that all of the money, selling documents, as well as other transaction items required to close the sale are exchanged properly.

Closing Costs – What are They?

Closing costs refer to a number of fees which are paid by both the buyers and sellers towards the close of the real estate transaction. These costs are separate from the agent commissions. Our Brokerage charges a flat mls listing fee. We'll sell your home fast and save you $1,000s in real estate commission. Overall, the costs often range from between 1% and 7% of the actual selling price, though sellers usually pay any amount between 1% and 3%.Texas Flat Fee MLS Listing Options

Even though the buyers often have more items to pay for when closing comes, it is usually depending on the seller to cover all commissions for the agents. The closing costs for the sellers are usually taken from the profit that you make on the home sale unless low equity is achieved. In this case, there may be a need to bring cash in order to cover all of the expenses.

If you have been wondering why the closing costs may vary in a wide range, it is often because there are various fees, and not to mention some of the legal requirements for every municipality and state.

Expenses Included in the Closing Costs

Here are some of the expenses that can be counted as part of the closing costs:

  • Title Insurance Expenses

The role of the insurance is to make sure that the home is yours for selling, thus protecting the investment of the buyer against scenarios wherein somebody might end up making a claim of ownership on the property. The sellers pay the title insurance premium of the new owner. It is also reasonable to expect that the amount widely varies depending on your location, as well as the title company that you are working with.

  • Prepayment Penalties

Certain lenders end up charging prepayment penalties for early payment of loans. The penalties may come from various sources, including a certain percentage of the remaining balance, or a sliding scale fee that is according to the age of the loan. In this case, there is a need to check with your lender in order to determine whether there is a need to pay for a prepayment penalty, including the costs of the penalty. 

  • Loan Payoff Expenses

Unlike rent that is paid in advance, mortgage payments are usually paid in arrears. By completing the payment of your existing loan, you may end up paying more than the remaining balance because the lenders usually charge for prorated interest. A tip in getting a good estimate of the amount that you need to pay is adding one mortgage payment to the current balance.

  • Recording Fees or Transfer Taxes

The recording fees or the transfer taxes refer to the taxes which have been charged by either the state or the local government as soon as you transfer a title from an owner to another. Every state deal with these scenarios differently. In certain states, flat fees are to be expected, though, in others, the fees are a fixed percentage of the actual sale price.

  • HOA Transfer Fees or Unpaid HOA Due

At closing, the seller typically owes any unpaid dues to the homeowner association. The Homeowners Association may also charge certain fees involved in the transfer of property to the new owner. Some of the transfer fees will also be detailed in the purchase contract. The fee may be expected to range within $100 and $400. You may also contact the Homeowners Association in order to understand further what you owe.

  • Attorney Fees

If you have made an agreement to cover the closing fees of the buyer in the contract, those fees also need to be paid at closing. The buyer credits are completely dependent on what you have negotiated and agreed on in your agreement.

Calculating the Expected Closing Costs

The closing costs may widely vary depending on the factors which have been mentioned above. This particularly involves the laws in your specific area, the commission rates of the involved agents, the title fees, and the loan payoff costs.

Take note that every sale of a property is different, which means that there may be a need for you to communicate with your agent as early as possible in order to understand the amount that you need to prepare at closing. You will receive an estimated amount based on transactions with a similar nature. There are also some closing cost calculators that you can get online.


As a seller, you definitely deserve to know everything. After all, selling your property does not just mean that you can expect the amount at the sale, without shedding money from your pocket. By taking into consideration the details outlined above, you will be guided accordingly, especially when it comes to identifying how much the closing costs are.

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