What is Closing?
Closing on a house is the process of getting from an accepted offer to legally transferring ownership. On a mutually agreed upon date by the buyer and seller, the funds are distributed, final documents are signed at the title company, and this is seen as the final step in the process of buying or selling a home.
Typical Closing Costs for a Seller
Do typical seller closing costs really exist? Yes and No.
Different states have different legal requirements and fees. For example, Bankrate.com suggests, “If you live in Texas, you’ll face the highest closing costs in the country. However, if you live in Nevada, you’ll experience the lowest.”
Even with the state differences, there are still a lot of similarities across closing statements around the country.
Let’s take a look at the big five.
Agent Commission
The largest fee a seller will take on during the home sale process. While commissions are negotiable, despite what anyone tells you, the nationwide average tends to be 6% (3% to a buyer’s agent and 3% to a listing agent).
Transfer Tax / Recording Fees
Your local government and state will charge different taxes and fees to transfer the title from a home seller to the new home buyer. This differs per market.
Attorney’s Fees
The amount an attorney costs will vary market by market. In some cities, an attorney will handle the closing process and paperwork. Meanwhile, in other cities this is done by a title company. Sometimes the seller pays and sometimes the buyer pays, it all depends what you and your agent are able to negotiate.
Mortgage Payoff / Prepayment penalty
Many home sellers don’t realize that if you pay off your mortgage too quickly, your lender might be able to charge you a fee. Lenders will often do this to make up for the fact that they won’t be able to collect your money in the form of interest anymore.
Pay off loan
Are you selling your house before you fully own it? If so, you might still have bills to pay. As a result, paying off your loan could be a big bill at the end of the day.
According to Zillow, the average home price in the US in 2019 is $226,700. Since the average closing costs for a seller is 6%-10% of the home’s sale price, this means that if your home sells for $225,000, you could be paying somewhere between $13,500 – $22,500 in seller closing costs.
