Some home sellers believe that when they go to sell their home that there is no cost to them other than any updates that may be required. However, this is not all that a seller must worry about. While some think that the home buyer is in charge of covering closing costs, the seller may be surprised to find out that there are actually some costs on their side as well.
What Exactly are Closing Costs?
Closing costs are the expenses a home buyer must pay when they purchase a home generally, but home sellers can also expect to see closing costs, as well. The costs include things like property taxes, mortgage insurance, and interest on the mortgage for the buyer but things like real estate agent commissions and transfer taxes and fees can be expected for the seller.
Title Insurance
Title insurance is an important part of the home buying process. A buyer can purchase it to cover themselves if there is a problem on the title of the property they are purchasing, or to protect themselves if they are transferring property that is worth less than the amount owed on it.
There are various factors that can affect the cost of title insurance for a seller. For example, some states require the seller to have had continuous ownership of the property for two years before being able to sell it, while some others only require one year. The more expensive coverage required by state law will result in higher closing costs for sellers. It would be better for them to consult an agent who has expertise in their particular situation before making any decisions on whether or not they should purchase title insurance.
Real Estate Commissions
Generally, the home seller pays real estate commissions to the buyers’ and the sellers’ real estate agents. An average commission rate is about 3% for each agent. However, these commissions can vary based on the locality and the type of property being sold.
Seller Concessions
This term refers to the closing costs that the seller agrees to pay. This can obviously range quite widely due to these arrangements being negotiable. Costs such as attorney fees, appraisal inspections, and more may be paid for by the seller if this is what is agreed upon.
However, seller concessions are not necessary. Depending on the type of housing market, sellers may or may not choose to offer these concessions to better entice the buyer or vice versa if the housing market is booming on the sellers end.
Do You Plan to Sell?
Having background information before selling a home is essential if you want your home to sell quickly and in order to get the most for your property. To better understand where your closing costs may lie, utilize this seller closing costs calculator so that you aren’t caught off guard when it comes time to sell.
