Are you a first-time home seller? If you are, then you are most likely already aware of how much you owe on the mortgage, and you might even know your home’s market value. But do you know what to expect when it comes to closing costs for sellers?
Unlike buyers, sellers are typically required to pay a variety of costs, including real estate agent commissions and title insurance. There are a lot of things that sellers are responsible for and all the costs can amount to roughly 10% of the sale price of your home.
What Are The Closing Costs For Sellers?
In a seller’s market, when there is a shortage of homes for sale in the U.S., the seller has the advantage. However, a lot of sellers don’t realize that closing costs for sellers can really add up.
Here we cover some of the various costs that come with selling your house so that you can feel a little more prepared when it’s your turn to put your home on the market.
Real Estate Agent Commissions
Probably the most significant closing costs for sellers, besides paying off their current mortgage, is the real estate commission. It is usually common for the seller to pay the commission for both the seller’s and the buyer’s agents, depending on the property, the buyer, the agents you’re working with, and a few other factors. That usually amounts to a 6% hit to your bottom line, 3% to your agent, and 3% to the buyers agent.
You might think that you can avoid this by trying to sell your home yourself, but the buyer’s agent will then expect the full 6% commission. We highly suggest hiring an agent from the start, someone who understands how to negotiate, how to read and understand contracts, and help you throughout the entire process.
You can always try to negotiate fees when hiring a real estate agent, but you can’t make any deals when you’re at the closing process.
Home Inspection (Pre-Sale)
A presale home inspection is not required and could cost around $400 or maybe even more. However, they can be very beneficial to you, and might even factor into some of the closing costs for sellers. Some sellers make the investment if they are anxious to find out if their home has any structural or mechanical problems. Then they won’t be surprised with problems when a potential buyer brings in their own inspector.
This is a great benefit because a presale inspection gives you the opportunity to make major repairs ahead of time. This removes the risk of buyers asking you to lower the price of your home or demand you make repairs before they move in. Your agent will be able to tell you whether a presale home inspection is a good idea. Remember that you will have to disclose any potential problems with the buyer, depending on your state’s laws for disclosure requirements.
Home Repairs
Like we discussed above, some of the closing costs for sellers include home repairs. There are likely things you can be doing to enhance the appeal of your home and even raise it’s home value with a few DIY projects. Maybe you’ve been putting off sprucing up the exterior of your property or avoiding that much needed paint job. We suggest making all those little things you can now, before you put your home on the market.
Usually a home’s value can be easily increased with just a few minor cosmetic updates. Painting, decluttering, replacing tile, replacing hardware, there is an endless list of things you can do.
You might also be required or stuck with paying any problems that the buyers inspector finds, like a damaged roof or plumbing that needs replacing. If you want to close the deals, these are some of the closing costs for sellers. Big repairs might set you back financially and be more than you were expecting, so try to prepare for the worst when it’s time for an inspection.
Home Staging
You’ve been a buyer. Didn’t you like to walk through houses that you could really imagine yourself living in? If you’re a seller, it might be worthwhile to pair up with an interior designer or professional stager to help spruce up your home. It can be really affordable to increase the curb appeal and make your home feel neutral and inviting.
Stagers know how to enhance your home’s best features and minimize the parts that might not sell easily. Basically, their job is to help prospective buyers imagine themselves in your home. They have the skills to repurpose a room in ways you might not have even imagined. Keep in mind that this could be another thing to add to the list of closing costs for sellers, and the price varies depending on the size of your home and how much work has to be done.
Additional Fees Included In Closing Costs For Sellers
Though it is traditionally the responsibility of the buyer to cover the closing costs to sell a house, you should not be surprised if you are asked to cover it. Depending on the market, or if you are struggling to sell, this might be the thing that tips the buyer to buy your home.
Some of the things included in closing costs might include homeowners association fees, attorney fees, title insurance, property taxes and transfer taxes. Altogether, closing costs can range from 2 to 4 percent of the home’s sale price. Most of these fees, however are negotiable and it is highly unlikely that a seller will be responsible for each of these. We just want you to be as prepared as possible.
Talk To Your Agent
Bottom line when it comes to closing costs for sellers? Talk to your agent first. They’ll be able to help prepare for you for any unseen costs and help negotiate on your behalf. Lots of filing and recording fees or transfer taxes are determined by the state or local jurisdiction.
The purchase contract will clearly define who is responsible for paying what, so make sure you read it thoroughly and stay in contact with your agent during this process.
Hopefully we’ve answered some of your questions for what is included in closing costs for sellers and give you a little more peace of mind for what to expect. Reach out to the experts at Harbor Realty today and let us show you the process and make it easy and straightforward.
