While the sellers may rejoice at the time of assessing the value of their home and selling the same at a premium price, they should not forget about the various costs they need to bear with it. The sellers need to pay an array of costs which are also called the sellers’ costs. As the name says, while selling your home, you will receive a worthwhile profit, but you must also account for the closing costs you need to bear as a part of the sale price.

Here we explain all about the seller’s cost and their types. It is imperative to be aware of such information so that you are an informed seller. It will save you from disappointment later.

Sellers’ cost

Consider you have a home to sell that has a loan and the excess amount is your profit. Now before you start calculating your profit and the amount of the down payment for your next property, you must consider closing costs too as a seller. If you are thinking about whether the buyers also need to pay the closing costs, then be informed that they also bear the closing costs.

Closing costs for sellers depend on the area you live, in and some more factors. On average, the seller is expected to bear the cost of 6% to 10% of the sale price of the home as the total closing cost. This may not be considered as cash coming out of the seller’s pocket but the same is deducted from the profit the seller makes by selling the home. This may not hold true in the case of a seller who is selling a home with a low equity mortgage. Similarly, home buyers for cash may have different costs.

Type of Sellers’ cost

Here is a range of closing costs for sellers that every seller should know about:

Realtor cost

One of the considerable sellers closing costs is the commission they pay to the real estate agents. The same has become an essential component of the real estate transaction. The commissions needed to pay for a real estate transaction are usually negotiable. The same varies with the market. Most likely, the traditional realtor charges a commission of 6% of the home sales price. The same is split between the seller’s agent and the buyer’s agent.

For example, if a home is sold at the price point of $350,000, then the seller will have to pay a price of $21,000 to the real estate agents as a realtor commission. Buyers need not pay this cost as the seller pays the entire real estate commission.

Loan payoff

Another cost that home sellers often need to consider is that the home sales price needs to pay their mortgage amount. The mortgage payoff balance is more than the remaining mortgage balance and the buyer’s buying price too. This is due to the lenders’ keen interest in the mortgage.

There may be a chance that your lender needs you to bear a prepayment fee for paying the loan before the expected date of the term. In case you have a line of credit or home equity loan along with the mortgage, the lender needs you to pay the same in full as the sellers’ closing costs.

Ensure to speak to your lender and clear the terms and requirements of the mortgage payment. This is how you will know the correct closing costs.

Taxes

There is a range of taxes and fees that the person needs to bear. The sellers must know about the transfer taxes, recording fees, property taxes, and more. These are other essential parts of the seller’s closing costs.

Here we explain these closing costs for sellers:

• Transfer taxes are those which are levied by the state or local government. As the name says, these taxes are taken as a service of transferring the title from the seller to the name of buyer. Transfer taxes are one of the most critical closing costs for sellers.
• Other than the transfer taxes and transfer feeds collection, the property taxes are also borne by the seller. The same must be kept up to date so that it is clear at the time of handing over the keys to the buyer.

Title insurance fees

Title insurance fees are an important part of the sellers’ cost that one needs to keep in mind, at the time of selling real estate. One of the vital parts of the closing costs, sellers must pay the premium of the buyer’s title insurance. Paying the Title insurance fees ensures that the buyers as well as lenders are protected in case there are issues related to the title in the real estate.

Attorney fees

Have you heard about this one? Most home sellers hire their own real estate attorney. The attorney is important in representing their clients at the settlement of the sale of the house. The seller often pays the attorney their fees and is considered a part of closing costs.

It is not necessary that only the sellers have their attorney, even the buyers have an attorney. As per the market traditions, one can hire an attorney in their area. In some places, it is a common norm to have one settlement attorney who looks after the real estate transaction. Usually, in most localities, the seller pays for the attorney fees, while in some areas, the buyer bears the attorney fees.

Additional sellers’ closing costs

There are many additional closing costs for the sellers too. Such costs in real estate transactions are:

• Liens or property judgments
• Escrow fees
• Non-payment of the homeowner’s association till the settlement date.
• Prorated property taxes

These are a range of extra closing costs that the sellers need to pay for a quick home sale. These are usually different than what the buyers have to bear at the time of closing.

As per the home sale contract, the closing costs may vary. Sometimes, the sellers pay other fees and costs like termite inspection fees, pest remediation fees, home warranty premiums, repair costs, repair costs for the items that were found defective at the time of home inspection, and more. Hence, the seller must be ready to bear such costs too.

Also, estimate the closing costs which the sellers need to incur in preparing the home. There is a cost involved such as making cosmetic repairs, calling a professional home stager, etc. Many home sellers also spend a few hundred dollars in paying a professional photographer. This makes the home look more attractive in the MLS listing. All these closing costs fetch a higher return to the seller as the home is not just sold quickly but at also a higher sales price.