Closing Costs for Sellers
Closing Costs for Sellers
The average closing costs for a seller total roughly 7% to 9% of the sale price of the home. Sellers need to pay for transfer taxes, a title search, and other fees related to verifying ownership, transferring the property, and paying off outstanding balances. Here’s a quick breakdown of potential costs and fees:
· 6% Realtor commission Fee
· Transfer taxes
· Title insurance (for the buyer)
· Prorated property taxes
· HOA fees
· Loan payoff costs
· Outstanding amounts owed on the property
· Attorney or settlement fees
Transfer Taxes: Variable
Sellers are typically required to pay real estate transfer taxes. While most states have a fixed-rate for transfer taxes, New Jersey uses a bracket system that increases the rate at different price thresholds.
For an in-depth look at New Jersey transfer taxes, click here.
Title Insurance
Title Insurance protects buyers and lenders against title issues that they were unaware of at the time of the purchase. This means that if six months after closing, someone shows up claiming the rights to the property with documents to prove it, the title insurance will reimburse any associated financial losses.
Title insurance will typically cost $1,000, according to Realtor.com.
Prorated property Taxes
As you know, when you own a property, you pay property taxes. While the property tax rate can vary widely state to state, all 50 states have some form of property taxes.
Most states accept property tax payments twice a year, and you can either pay them directly or have them paid out of an escrow account associated with your mortgage. When you go to sell your house, you’ll be responsible for prorated property taxes due up to the date of the sale, at which point the buyer will take over. Depending on your timing, you may have to pay money at closing to bring yourself up to date.
HOA Fees
If you’re living in a community that is subject to a homeowner’s association (HOA), you likely pay monthly, quarterly, or yearly dues. Just like with property taxes, you’ll have to make sure you’ve paid up to the close date, which can mean forking out some cash at closing. Some HOAs also charge a transfer fee to transfer your property to the new owner.
Loan Payoff costs
When you sell your home, you’ll pay off the remaining mortgage balance before closing. Depending on your lender, you may be required to pay a penalty for paying off your loan before the end of the mortgage term. The fees for this will vary from lender to lender, so check with yours to find out if you’ll be subject to this expense.
Outstanding Amounts Owed on the Property
If you have any outstanding balances for homeowners insurance, property taxes, utility bills, or HOA fees, they’ll be prorated to the closing date and you’ll be required to pay them AT closing.
Attorney or Settlement Fees
If an attorney assists you in closing on your home, you will need to pay an attorney fee. This typically costs between $1,500-$2,200 in New Jersey.
If closing is handled by an escrow or title agent, you will need to pay approximately $2 per $1,000 in sales price.
