Before you list your home for sale, you should be aware of the potential closing costs you’ll be responsible for paying. Knowing what to expect at closing will help you understand your financial responsibilities and will allow you to set your list price confidently. This post will explain how to calculate an estimate of your seller closing costs.
These expenses are typically paid to the attorney or title company that oversees the closing process. Closing and escrow fees may vary, but they typically start at $250 and are then charged at a rate of about $2 per every $1,000 of the sale price. Therefore, if you were to sell your home for $200,000, you’d pay the initial $250 in closing fees on top of another $400, bringing your total escrow fees to $650.
In addition to paying the title company or escrow team, you’ll also need to pay underwriting fees to the buyer’s mortgage company. Essentially, these fees are designed to cover the cost of the mortgage company researching and screening the potential buyer to make sure they’re a viable candidate for their mortgage. Typically, these fees are around $800, though they may be slightly more or less depending on where you live.
Title and Surveying Costs:
In some cases, the seller must also pay title and surveying costs. Title costs are usually a few hundred dollars (but can vary greatly) and cover the costs associated with making sure the home’s title is clean. Surveying costs can add another $400 to the closing costs and include land surveying done to confirm the property’s boundaries and zoning.
Need help figuring out an accurate list price? Use our free worksheet!
HOA Transfer Fees:
If you currently belong to a homeowner’s association, you may also be responsible for paying HOA transfer fees. This will prove to the buyer that you’re current on all your HOA dues and will provide additional HOA information to the new buyer. You can generally expect to pay around $400 for HOA transfer costs, though it will vary from one association to the next. Check out this post for more information on HOA transfer fees.
Inspection and Appraisal:
Finally, depending on the deal you’ve worked out with the buyers, you may also be responsible for paying for the home inspection and appraisal; if so, expect to add another $600 to your closing costs. These fees are negotiable and are sometimes split between the buyer and seller or are sometimes covered by the buyer. All the details will be outlined in your purchase agreement, so make sure you understand what you’re agreeing to pay for before you head into escrow.
In general, closing costs will range between 2% and 5% of the home’s total sale price, depending on your negotiations with the buyer. On a $200,000 home, you can expect to budget at least $4,000 for closing costs. Check out this post for more details on common seller fees.
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