Last Updated on July 17, 2022 by Luke Feldbrugge
Closing costs for sellers can vary. Some closing costs are required, whereas other can be negotiated. Closing day is the light at the end of the tunnel. It is when you will finally be able to consider your home officially sold and the selling process completed. While you may remember paying closing costs as a buyer, there are closing costs for sellers as well. To assure things go smoothly and to help you save as much money as possible, here’s everything you need to know about closing costs for sellers.
Selling Your Home and What it Means to Close
It takes a lot to sell a house. First, you have to figure out what your home is worth to price it effectively. Then you have to get it ready to sell, including preparing a seller’s disclosure statement and staging your home to attract the most potential buyers. But perhaps the two biggest milestones in selling a house are when you accept an offer and when you close.
While accepting an offer is certainly cause for celebration, there are many things that still need to happen, and there is always a possibility that the deal may fall through. The sale only becomes truly official when you close. Closing day typically comes four to six weeks after you accept the offer, but timelines can vary greatly depending on the details of the sale. On closing day, you and all other parties involved will finalize documents and “close” the sale.
Who Pays Closing Costs?
The simple answer is that both buyers and sellers typically pay closing costs in one form or another. In most real estate transactions, there are certain fees that are the seller’s responsibility, while others typically fall on the buyer. A good example are the fees that each party will pay to their individual lenders. Buyers will typically pay more than sellers, usually around 6% of the total purchase price.
Do Sellers Pay the Buyer’s Closing Costs?
In some instances, yes. As part of the purchase agreement negotiations, buyers and sellers can agree to pay some or all of each other’s closing costs. Some sellers will use closing costs as a negotiation tactic to get a deal to go through. Other times, buyers will insist a seller take on some of their closing costs to make up for needed repairs on the home. As with most things in a home sale, closing costs for sellers and buyers are negotiable. Consult with your real estate agent about how you can come out ahead in these negotiations.
Typical Closing Costs for Sellers
Closing costs for sellers can typically run anywhere from 6-10 percent of your home’s sale price. It still stings, but not quite as bad for many home sellers, because seller closing costs can be paid with the equity you have in your home, unless you do not have much home equity.
Here are the typical closing costs for sellers:
Real Estate Agent Commissions
Real estate agent commissions are typically the largest percentage of closing costs for sellers. If you’re a home seller, usually you would pay your real estate agent’s commission and the buyer’s agent commission. Generally it is somewhere around 6 percent of the home sale price, and 3 percent usually goes to each agent.
Here’s a tip: When you work with a Homes for Heroes real estate specialist to sell your home, they give you part of their commission back after you close on your home sale. Homes for Heroes will send you a check after you close. The average savings a hero receives is $3,000. Sign up today to speak with our local real estate specialist in your area and they will answer all of your questions. It’s simply our way to say thank you for your service.
Title Insurance Closing Costs for Sellers
Home sellers can expect to pay for a title insurance policy. This policy protects the lender and the home buyer who’s purchasing your home (if they buy their own policy) if any unexpected home ownership claims come up. This is a better-safe-than-sorry cost.
It has not been a buyer’s market for awhile, but when it is, sometimes you might agree to pay some of the buyers closing costs to get the deal to go through. There are several different names for this tactic and they are:
- Seller concessions
- Seller credit
- Seller contributions
A common seller concession is paying for any repairs discovered during the home inspection. There may be a limit on how much you can pay as seller commissions, but that will depend on the home buyer and how they are financing the purchase of your home. Different mortgage types have different limits on seller concessions.
Taxes and Fees May be Negotiable
Many taxes and fees for a home sale closing are dictated by state and local regulations. This means these costs are often not negotiable. For example, home sellers typically will need to pay property and/or deed transfer tax.
You will need to pay any liens or judgements outstanding on your property before the sale of your home can be finalized.
Remaining Amount on Current Mortgage
This is not really a “closing cost” but when your home sells, the remaining amount on your home mortgage will need to be paid off.
This is also true for any outstanding home equity loans, line of credit, or a second mortgage you may have. These will also need to be paid in full in order for your home to be sold.
The amount you pay for each of these items will vary. Make sure you understand what these costs are by talking to your real estate agent and your lender. As you go through the home selling process, keep these costs in mind so you’re not surprised by how much you’ll need to pay to actually get your home sold.
What to Bring to Closing
When closing day arrives, you’ll need to bring some of the relevant documents as well as a few other items. Your real estate agent should bring the majority of the documents with them, but you’ll still be responsible for some things. Here’s what you should bring to closing:
- Copy of the purchase agreement
- Cashier’s check and personal checkbook
- Keys to all exterior and interior doors, including garage door openers
- Photo ID
- Proof of home warranty (if applicable)
- Proof of any home repairs outlined in purchase agreement
Consult with your agent before closing day and they should provide you with a complete list of everything you’ll need to bring to closing.
Home Closing Checklist for Sellers
As a seller, closing on a house isn’t all about signing documents. There are a number of other steps you’ll have to take to get your home ready for closing. Here are just a few of the tasks you’ll need to complete leading up to closing day:
- Move all items out of your home, unless agreed upon in the offer
- Clean your home
- Cancel or transfer your utilities
- Cancel or transfer your homeowners insurance policy
- Lock all doors and windows
- Notify post office of address change
How to Save Money with Homes for Heroes
The best way for sellers to save money on closing costs is to take advantage of the unique offerings provided by Homes for Heroes. We’re dedicated to saving heroes money any way we can, and heroes who use our program to sell a house save an average of $3,000. As you go through the selling process, use our local deals page to save money on everything from home inspections to title fees to professional movers. It’s our way of saying thank you for all that heroes do to serve our community.
As unpleasant as they might be, closing costs for sellers are a necessary evil when it comes to selling a house. But by following best practices, negotiating well and using programs like Homes for Heroes to save money, sellers can come out ahead and make closing day a smooth and successful experience.
Looking for ways to save money on your next home sale? Register with Homes for Heroes today. There’s no obligation and you’ll be automatically matched with a specialist in your area who can help you sell your home quickly and save you money in the process.