How to Save Money on Closing Costs as a Seller


BY The Lenders Network

closing costs for seller

3 minute read

If you’re selling your home, there are a variety of costs you should be aware of.

Sellers have closing costs, real estate commissions, and other fees to pay when selling a home.

In this article we’re going to break down common closing costs sellers pay.

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How to Lower Sellers Closing Costs

  • Negotiate a lower commission with a real estate agent
  • Put your home up for sale by owner
  • Do not pay for the buyers closing costs
  • If you agree to pay closing costs, raise the purchase price
  • Shop around for buyers title insurance

Most Common Closing Costs for Sellers

Real Estate Commissions

Sellers can expect several fees and costs associated with selling a home. The biggest expense sellers are responsible for is paying the real estate commissions for both sides of the transaction. Typically, sellers can expect to pay a 6% realtors’ commission which the sellers agent splits 50/50 with the buyers agent.

Some agents are willing to negotiate a little bit when it comes to commissions, but expect not to receive as much effort to sell your home from your realtor.

You could also but your up for sale by owner, skipping the agent altogether. However, you will still be responsible for paying the buyers agent’s commission.

Title Insurance for the Buyer

Title insurance protects the buyer in the event there are any issues with a deed, or title.

The title company will have a third-party company do a title search to look for any issues before closing. However, sometimes they miss something, such as tax liens, forged signatures, or other monetary obligations that are owed before the deed can be transferred.

On average title insurance is somewhere between $1,000-$2,000. You may be able to save money by asking for the title date to be re-issued and my shopping around to get the best deal.

Real Estate Transfer Taxes

Depending on the state and county where the property is located there is a fee to transfer the title from owner to another.

Some states, like Texas, do not charge title transfer taxes. Most states charge somewhere between .1% – 1%. Colorado has the highest transfer fee of 1%-4%.

Check transfer tax rates in your state

Prorated Property Taxes and HOA Fees

Property taxes greatly vary from state to state. Hawaii has the lowest property tax rate of 0.28%, New Jersey has the highest rate of 2.4%.

Property taxes and HOA fees are billed annually. Sellers will have to pay the prorated amount of property tax and HOA fees for the time they lived in the property. These fees are subtracted from the total at closing.

Attorney Fees

Several states require an attorney be present, or oversea aspects of a real estate transaction. If the lender needs an attorney for any part of the transaction those fees are paid by the buyer.

If the seller has their own real estate lawyer they are responsible for those fees.

Buyers Credits

Most types of loans allow the seller to pay between 3% – 6% of the buyers closing costs. Buyers need to request for seller paid closing costs in the original real estate agreement.

In a buyers market when offers are few and far between you may be inclined to agree to paying a portion of closing costs if it means selling your home.

However, if you’re goal is to keep closing costs as low as possible you can either refuse to pay closing costs, or you can agree to pay closing costs but add the amount you’re paying to the purchase price so it evens out for you.