When listing a home for sale, closings costs should first be understood before determining a go-to-market list price.

On average, closing costs for sellers can range from 4 to 10 percent.

Real Estate commissions are not the only fees charged to sellers. You’ll need to factor in items like Escrow fees, title insurance fees and city transfer taxes.

There are many ways to lower your closings costs which could, in turn, allow you to set your list price at a competitive number. Marketing your property on the low to mid-range can often yield more interest, faster closing, and a higher net return.

Here are some common closing costs you will see when selling a home:

1. Real Estate Agent Commissions

When you list a home for sale through a broker, you will likely negotiate real estate commissions as payment. Commissions are paid to your listing broker for both the buyer and seller agency sides, then your broker will set a payment structure to pay the buyer agency directly.

Typical total full-service listing agent commission fees are estimated at 4-6% of the Sale Price:

  • 1-3% of the sale price to the listing agency
  • 2-3% on the buyer agency. Note: Offering less than 2.5 to 3% commission often discourages buyer agents, resulting in agents not wanting to show your property to their client.
  • If you allow dual agency (where your broker represents you as the seller and also the buyer, you can often see a reduction in total commissions by 1%).

When you list through OfferDash, you have several options to choose, which help you save on real estate commission closing costs.

2. Seller Escrow Fees

In a real estate sales transaction, you will use an escrow company to hold and disburse funds. This is usually a 3rd party escrow company selected by either the buyer or seller. However, in some cases, real estate brokers can also provide broker escrow services.

It is customary in a real estate transaction that each party pays its own escrow fees. Common escrow fees can range between $500-$2,000 per side. Every escrow company sets their own fees so it’s a good idea to get be selective and include in the contract that escrow shall be selected by Sellers Choice.

When using OfferDash to sell a home, Sellers pay $0 in escrow fees.

3. Title Insurance Fees

The financial responsibility for title insurance varies from county to county. In some areas the buyer is responsible and other areas the seller is responsible for. In California, it’s customary in a sales transaction that the seller pays title insurance fees. Title insurance provides a buyer comfort that the property is being transferred free and clear without any liens.

A title insurance company will run a title search and provide a copy of a preliminary title report to all parties. This report will include any liens, encumbrances or clouds on title. In order to record, any liens noted on this document will need to be released or transferred to the new buyer upon close.

Title insurance protects the new buyer from any liens not recorded. Fees for title insurance vary, however, the cost of a title insurance policy is often between 0.2% of the sale price or $1,600 on average.

4. Assessments and Liens

Any assessments or liens on the property need to be paid and/or resolved before the close of escrow. Examples include tax liens or judgments, etc. This is typically always the seller’s responsibility unless otherwise agreed to in negotiations. In Short Sales, you may see a lender require the buyer to pay off certain items like Solar liens, etc.

5. Property Repairs

Before listing your home, you’ll want to make sure your property is considered “safe, sound and sanitary.” By following those guidelines there are higher chances buyers with VA and FHA loans will have an easier time getting their loan approved. There are certain repairs that are required the seller complete for some loans and fixing those items prior to listing could save everyone time and money. Here are some repairs and reports we recommend you have done as the seller:

  • Pre-Inspection Report – It’s often recommended to have a pre-inspection done prior to listing your home in order to know what issues might be found once in escrow. Inspection reports range in price from $395 to $700+ depending on the size of the property.
  • Termite Inspection Report – section 1 clearance of a termite report is almost always paid for by the seller. The reports typically cost $75-$100 to produce. Included in the report will be any estimates for tenant (if required) or wood repairs needed. Depending on the inspection results, repairs can be anywhere between $1,000 and $5,000.
  • Septic Report (if on septic) – if your property is on septic, you’ll likely need to have a report showing that septic is in good condition. This is often always paid for and provided by the seller.

6. Home Warranty

Home warranties are a negotiable item, but in many cases are provided by the seller. The warranty covers appliances in the home and upgraded policies can include AC units or even pool equipment. Typical home warranty fees range between $400 to $650.

7. Buyer Closing Credits

A buyer may request that the seller provide a closing credit which could be up to about 3% of the purchase price. This credit can help a buyer who typically doesn’t have a lot of liquidity. The credits can be applied to the buyers closing costs in order to help them pay closing fees. The closing credit may also be used to buy down their interest rate.

8. Property Taxes

The seller is responsible for the payment of property taxes until the last day of ownership. Upon closing a seller will be reimbursed for any prepaid property taxes.

9. Transaction Management Fees

Listing agencies will often use a transaction management company to assist in completing the required paperwork. Typical transaction management fees range between $600-700 per side. This fee can sometimes be paid by the agency as part of commissions.

10. Deed Recording Fees

When you close escrow, often your title company will record the transaction at the county offices. This fee is often paid for by the seller and averages $115.

11. Mortgage Debt Balance Payoff

Prior to closing, the escrow company will request a mortgage payoff from any lenders. It’s important to note that this cost can also include a loan payoff fee, which will vary by lender and may include a prepayment penalty fee is outlined in your mortgage. Once escrow closes, the escrow company will pay your mortgage debt with the closing fees.

12. City or county transfer fees

Transfer tax is a tax imposed by states, counties, and cities on the transfer of the title of real property from one person (or entity) to another within the jurisdiction. It is based on the property’s sale price and is paid by the buyer, seller, or both parties upon transfer of real property.

13. Notary fees

Prior to closing escrow, you will need to sign your deed of trust with a notary. Notary fees are typically under $100 and can often be free at most banks. Notaries will verify your identity and ensure proper execution of paperwork.

14. Home Owner’s Association (HOA) transfer fee

If the property you’re selling has an HOA, your home-owners association will likely charge a transfer fee. This fee covers document preparation and transferring accounts to the new buyer. HOA transfer fees are typically less than $1,000.

15. Natural Hazard Disclosure Report

This report details natural hazards areas, such as earthquake fault lines, fire, and flood zones or even items like airplane noise disturbances. The NHD disclosure is typically around $125 and usually paid by the seller.


Estimating Closing Costs on a $500,000 home

Alright, we have 15+ potential closing fees sellers are now aware of. When you sell through a Cash Offer Auction, all of these fees are paid by the investor.

If you decide to list your home on the MLS either through a DIY/For Sale by Owner Listing or a full service listing with an agent, here’s how your seller closing costs may look:

  • Seller Escrow Fees = $0
  • Title Insurance Fees = $1,600
  • Termite Report = $75
  • Assessments/Leins = Varies
  • Home Warranty = $500
  • Transaction Coordination = $600
  • Deed Recording Fees = $600
  • NHD Report = $125

TOTAL Seller Closing Costs before commissions = $3,500

Full-Service Listing Seller Closing Costs

Let’s see how Seller closings fees look on a $500,000 home when you sell through a full-service listing with OfferDash.

  • Real Estate Commissions = $500,000 x 3%  = $15,000
  • Total Seller Closing Costs before commissions = $3,500

TOTAL SELLER CLOSING COSTS = $18,500

DIY Listing Seller Closing Costs

Let’s see how Seller closings fees look on a $500,000 home when you sell through a full-service listing with OfferDash.

  • Real Estate Commissions = $500,000 x 2% +599 = $10,599
  • Total Seller Closing Costs before commissions = $3,500

TOTAL SELLER CLOSING COSTS = $14,099


Average Closing Costs for Sellers

On average, closings costs for sellers without paying off a mortgage or real estate commissions will be around $3,000 to $4,000. This price varies depending on the sale price of the home.

If you’re thinking about selling your home and are wondering the actual closing costs you could expect as a seller, request an estimated HUD from either your escrow company or real estate agent. Before signing a listing with an agent, have them provide a detailed closing costs estimate based on several potential sale prices. As you can see, most of the fees listed above are based on the sale price. So, lowering your listing price by 1% can sometimes not make much of a change to your end net proceeds.

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