Closing costs for home sellers differ according to their location but generally, a seller would pay 6% to 10% of the home’s sales price in closing costs. The seller may not have to pay his money in cash, but it would be removed from the profit the seller makes from selling their home. A seller may only have to pay cash if they’re selling with low equity on their mortgage.
The different types of closing costs include:
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Seller costs
The seller’s cost is in the form of a commission that the real estate agents get after the real estate transaction. The average commission on real estate is between 5-6% of the sales price; this is further divided between the listing real estate agent and the buyer’s agent.
Sellers are expected to pay real estate agent commissions.
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Loan payoff costs
Some home sellers fix a certain price on their homes so that they can comfortably pay off their mortgages. Your mortgage payoff balance is usually higher than the balance on your mortgage. Most times, you may be required to pay certain fees for paying off your mortgage before the agreed time. If you have a home equity loan plus your mortgage, the lender will ask that you pay in full at settlement to cover part of the closing costs for the seller.
Ensure to discuss with your lender the requirements to pay off the mortgage so you can know how much you’re to pay for closing costs.
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Transfer taxes or recording fees
Closing costs also include transfer taxes, recording fees, and property taxes. Transfer taxes are taxes you pay to transfer the title from the seller to the buyer. Sellers are mandated to pay transfer taxes by the state or local government. Also, sellers must pay property taxes before they hand over the keys to the new owner.
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Title insurance fees
Sellers pay title insurance fees as part of closing costs. Sellers are the ones to pay the buyer’s title insurance premium. The purpose of this insurance fee is to protect buyers and lenders in case any challenge arises with the title in a real estate transaction.
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Attorney fees
If you hire an attorney to represent you at the settlement of your real estate, then you’re obligated to pay attorney fees; all of which contribute to your closing costs.
However, this may vary according to different locations and markets. In some areas, there may be different attorneys for the buyers and sellers and in other areas, there may be only one attorney. In some areas, the attorney fee is paid by the buyers, and in other areas, the seller settles the bill.
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