Ever wonder how much selling your home costs? For a $300,000 home, seller closing costs can reach up to $30,000. These expenses cover everything from agent commissions to title insurance and escrow fees. All these can add up and quickly eat into your profits.
Is there any way to lower these seller closing costs? Yes! Opt for a Flat Fee MLS service instead of paying 3% to 6% in Realtor commissions. This could save you up to 3% of your home’s sale price.
What Are Some Typical Closing Costs for Sellers?
When selling your home, understanding the specific expenses you’ll face at closing is crucial. Given below are the estimated closing costs for the seller in 2024:
- Home Warranty Fee: The monthly home warranty fee varies between $65 and $75, depending on your chosen service. This fee covers maintenance expenses for appliances such as refrigerators and dishwashers for a specified duration.
- Title Search: Running a title search on a house costs approximately $150 to $500. It verifies property ownership by checking deeds, liens, and court judgments for any undisclosed claims.
- Municipal Lien Search: It typically ranges from $100 to $125. This service identifies unrecorded code violations, outstanding taxes, and utility bills associated with a property.
- Owner’s Title Insurance: Owner’s title insurance ranges from 0.5% to 1% of the property’s value. It protects the buyer against discrepancies in ownership and fraudulent documentation, covering issues such as back taxes, liens, and ownership disputes.
- Utility Bills: You are responsible for covering utility expenses, such as water, gas, and electricity, until the closing date. The title company verifies any outstanding bills or liens related to utilities.
- Home Inspection Fee: A home inspection ranges from $325 to $425. It can uncover essential issues with plumbing, electrical systems, etc.
- Mortgage Payoff: You must settle the outstanding mortgage balance, including accrued interest up to the closing date and potential prepayment penalties. This can amount to as much as 2% of the remaining balance.
- Real Estate Agent Commission: You must also pay Realtor commissions between 5% and 6% of the sale price. To reduce these costs by half, you could consider going FSBO.
- Escrow Fee: An escrow acts as a middleman who holds the property funds until all contractual obligations are fulfilled. It costs around 1% to 2% of the purchase price, shared between both the buyer and the seller.
- Settlement Fee: The settlement agent transfers the property title from the seller to the buyer. Based on state regulations, the settlement fee is paid to the agent, title company, escrow company, or attorney.
- Property Tax: The amount of tax owed is determined by the property’s value. This tax, levied by the local authorities, is due at closing. The property tax is prorated based on the purchase date.
- Documentary Stamp Tax/ Transfer Tax: This fee applies to the transfer of ownership from the seller to the buyer. It is usually $.70 for every $100 of the sale price.
How to Reduce Seller Closing Costs?
Realtor commissions are often the highest cost, up to 6% of the sale price. However, a discount broker charges between 0.5% and 2% of the sales price, reducing this to just 2%.
Another way to save on commission is to use FSBO websites. Platforms like Houzeo offer Flat Fee MLS services, through which you can list your home on the MLS.
Furthermore, you can negotiate better rates with buyers, attorneys, title companies, and appraisers. This can save you thousands in seller closing costs. Additionally, if your home inspection reveals minor repairs, consider doing them yourself instead of offering credit to the buyer.
What You Can Do Next
Understanding estimated seller closing costs is crucial for preparing a comprehensive home-selling budget. You should also factor in expenses like home repairs and staging costs. Researching local closing cost averages and understanding their distribution between you and the buyers will help you calculate your net proceeds.
