Closing Costs for Seller FAQ

How much are seller closing costs for a home sale? This resource answers frequently asked questions and includes a worksheet and calculator to help you find out.

Closing costs for home sellers are a combination of taxes, fees, and the costs of services in a home sale transaction. Closing costs vary for the seller and the buyer, but each party is typically responsible for paying at least some portion of the total burden.

If you’re in the market to sell your home, it’s important to understand what closing costs entail so you’re prepared when it comes time to finalize the sale of your house. Seller closing costs fluctuate according to factors including location, negotiation terms, and the circumstances of each individual sale.

Here are some answers to FAQs about seller closing costs.

What are closing costs?

Closing costs are fees associated with certain services that are required to finalize the purchase and sale of a house. In most transactions, the buyer has more closing costs to worry about. But the seller is responsible for some important closing costs as well, including commission fees for real estate agents.

As a seller, you’ll need to pay off any existing loans. The buyer and/or their lender will wire transfer the money to pay for the purchase of the house.

A third party, or an escrow company, manages the closing and moves the process along. This company will handle the administration of money, documents, and other items needed to close the sale of the house.

What’s included in closing costs?

There are a number of fees that typically make up seller closing costs. They may include some or all of the following:

  • Real estate agent commission
  • Transfer taxes
  • Escrow and closing fees
  • HOA fees
  • Attorney fees
  • Prorated property taxes
  • Credits toward closing costs
  • Title insurance
  • Appraisal fees
  • Seller inspection

Here’s a worksheet breaking down some common seller closing costs and how to calculate their average costs:

Cost Average Fee
Agent commissions Up to 6% of home sale (3% for each real estate agent)
Transfer tax $50-$5,000 (varies widely by state)
Escrow fees $500-$5,000 (split 50-50 between buyer and seller)
HOA fees $100-$500 (varies by community)
Attorney fees $500-$1,000 (varies by state)
Prorated property taxes Varies widely by state, county, and month of sale
Credits toward closing Varies widely by what is negotiated
Title insurance $1,000-$3,000 (buyer usually pays)
Appraisal fees $500-$700 (buyer usually pays)
Seller inspection $500-$750 (optional for seller)
Hidden costs Other seller costs may include repairs, staging a home, and moving

What’s not included in closing costs?

  • Loan prepayment fee: Sometimes, lenders may charge a prepayment penalty, which is a fee for paying your loan off early. This is a one-time payment that is made at closing to your mortgage lender.
  • Home improvements: In order to get your home in good condition to sell quickly, you may need to renovate your house. Whether it’s cosmetic fixes such as painting or landscaping or heavier repairs, these will be out-of-pocket expenses that won’t be covered.
  • Staging costs: Real estate agents may include staging fees, which help attract buyers, as part of their overall commission. But sometimes they will recommend this as a separate cost. Ask your agent what’s included in their commission.
  • Moving costs: These costs won’t be included with the sale of your home. But they add up into the thousands of dollars depending on what and where you’re moving.

How much are closing costs for the seller?

If you include real estate agent commissions, closing costs for seller add up to anywhere between 6 and 10 percent of your home’s sale price. But factoring in only costs separate from agent fees, sellers should expect to pay anywhere from 1 to 3 percent.

To understand your net proceeds, or the amount that ends up in your pocket after the sale, you need to deduct this amount from the final price of your house. If you’re selling with low equity on your home, you may not end up with as much profit as you expect. In fact, you may need to use cash to help pay the cost of closing, while some money is held in escrow. Remember, it’s typically up to the seller to cover commission for both real estate agents, which is the most significant closing cost item.

It helps to think of closing costs as a one-time expense that comes out of your profit from the sale. If there is no profit on the sale, these are out of pocket costs. Some closing costs are negotiable. For others, such as real estate attorney fees, you can comparison shop to reduce the total expense.

Related: How Much Does It Cost to Sell a House?

When do you pay seller closing costs?

Closing costs are due when the buyer’s funds are available for payment and closing documents are signed. This usually happens on the day of closing. Closing costs are deducted from the proceeds of the sale. Sellers won’t need to pay in cash unless the home is underwater—meaning, you owe more than it’s worth.

Also, you may be able to deduct certain fees, taxes, and charges from the sale of your home come tax season, so save receipts and invoices.

See more: Selling Your Home? What to Know About Taxes

Can you avoid paying seller closing costs?

Yes. There is one way to avoid paying closing costs as the seller, which we discuss below. But first, it’s important to understand that in the vast majority of home sales, closing costs simply come with the transaction. In fact, laws require some of the services in question. To reduce closing costs in a traditional market sale, here are a few tips::

  • Comparison shop for attorneys and escrow companies: Many companies set their own prices, so it might be worth doing some research before choosing.
  • Title insurance reissue rate: Title insurance is meant to protect both the lender and the buyer after closing the deal. If you lived in the home you’re selling for a few years, you may be able to qualify for a reduced rate on your owner’s title insurance policy.
  • Sell your home with a discount broker: You can try listing the home on your own (FSBO or for sale by owner) or try listing with a limited-service broker.

To avoid closing costs altogether, you can sell your house to an off-market buyer. Many off-market buyers, also known as cash buyers, will buy your house for one fixed price. This price already bakes in closing and transaction costs, and as the seller, you don’t need to handle any of the paperwork.

Sundae, for example, can help sellers receive multiple cash offers from vetted property investors on our marketplace. The offer you get is the price you receive, no strings attached.

How are closing costs calculated?

Closing costs are different based on the location and price of your home. Because of this, it may be helpful to use an online calculator or net proceeds calculator to help you.

Calculating closing costs is easy. All you need to do is plug in the applicable numbers, such as the sale price of your home and the cost of each closing cost item, such as real estate attorney fees, and property taxes.

Who pays closing costs?

As a rule of thumb, sellers pay real estate agent commission fees. Buyers, on the other hand, pay a number of other closing costs, such as fees related to their loan, title, and insurance. In most home sales, buyers can negotiate with sellers for closing costs, as long as it fits within the lender’s rules.

Ultimately, sellers and buyers are both responsible for paying some portion of closing costs. Occasionally, sellers may foot the entire bill, including costs for the buyer, especially in a buyers market. However, the seller is never obligated to do so.

Who pays often depends on the specific situation and how motivated the seller is to ensure a quick and smooth transaction of the home.

The buyer may cover:

  • Appraisal fees
  • Title insurance premium
  • Escrow costs
  • Document preparation (if any)
  • Notary fees
  • Pest inspections
  • Tax proration
  • Transfer fee from homeowner
  • Any new loan charges (except those required by lender for seller to pay, if any)
  • Interest on new loan from date of funding
  • Inspection fees (roofing, property inspection, etc.)
  • Home warranty
  • City conveyance/transfer taxes

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Claire Tak

Claire Tak is a writer and content expert with a background in personal finance. She is an advocate for improving financial transparency and literacy through content and education. Claire's work has been featured and syndicated in Bloomberg, MarketWatch, GoBankingRates, and The Motley Fool. When she's not writing, you can find her on a snowboard, watching a movie, or traveling.