Sellers Guide To Closing Costs

Seller Closing Costs

CENTURY 21 North East strives to bring the highest level of service to your home selling experience. Our team is here to help you navigate the process every step of the way. Understanding the seller's closing costs is one of those important steps. 

Seller closing costs are a very important point to consider in the process of selling your home. The closing costs are the fees banks and institutions charge and are included in the mortgage. The financial institution is required to provide a list of these fees. Generally speaking, the costs amount to around 2% - 5% of the total mortgage. These costs will vary from state to state. Basically, the costs are for the lawyers, brokerage commission, insurance, physical creation of the paperwork, and appraisal and inspection fees but the list can be much longer and appear unsettling for the home seller. 

The two main seller closing costs are the brokerage commission and the transfer taxes. The buyer may wish to negotiate payment of other closing costs with the seller. It’s great to have a seller’s agent from CENTURY 21 North East to represent you. You can find an agent from our seasoned team of real estate professionals in Connecticut, Maine, Massachusetts, New Hampshire, and Rhode Island through our offices map. You can also find an agent with your language of preference and location. Your seller’s agent will explain the details in simple language and advise you on any questions that may arise. 

Where are these costs listed?

Up until 2015, the United States government required all these costs to be itemized on the standard HUD-1 form for a residential mortgage. Lenders now use a loan estimate to calculate the terms of a mortgage and itemize the costs on a three page document called the closing disclosure. 

You can take a look at an example of the closing disclosure document at the Consumer Financial Protection Bureau, an official website of the United States government. The seller closing costs and buyer closing costs are listed on page 2 of the document. You will notice there are a handful of standard items listed on the form with an adjacent column for the amount paid by the seller and the amount paid by the buyer. Many items can be paid for by either the buyer or the seller. Most closing costs are fixed but sometimes can be negotiated. This is provided as an example of a typical closing disclosure document. The line items in your document will be specific to the sale of your home. 

Typical seller closing costs

Brokerage Commission: This cost is paid by the seller. It is often the largest cost involved for the seller. The fee is paid to the real estate broker listing the property. 

Transfer Taxes: This cost is paid by the seller. This is the tax paid for the transfer of property from the seller to the buyer. States collect these taxes. Other municipalities may collect transfer taxes as well. Transfer taxes may use different names such as deed transfer tax or recordation tax depending on the area. 

Additional seller closing costs to consider

Attorney fees: These are the fees paid to the lawyer for preparing and recording documents. This may be paid by either or both parties. 

Recording cost: These are fees paid to government agencies to enter an official record of the transfer of property. This may be paid by either or both parties. 

Appraisal fees: This is the fee paid to a professional appraiser to ensure the property is not priced greater than the fair market value. This is typically paid by the buyer but is occasionally paid by the seller after negotiation. 

Inspection fees: This is the fee paid to home & pest inspectors to ensure the property will retain its collateral value over the course of the mortgage. This is typically paid by the buyer at the time of inspection, but may be included in the closing costs. It is occasionally paid by the seller after negotiation. 

Home Warranty fees: This is the fee paid for a home warranty to insure major household systems. It can be paid by either party. The seller may elect to pay the fee as a strategy to give the buyer peace of mind. 

Look over the items carefully 

The closing costs can seem overwhelming to a home seller who isn’t a lawyer or a financier. Working with a trusted real estate seller’s agent from CENTURY 21 North East will give you peace of mind. The agent can better explain each item the financial institution has provided on the closing disclosure form. 

CENTURY 21 North East agents believe in providing extraordinary service and going above and beyond for our clients. Learn more about CENTURY 21 North East by exploring the communities we represent and our current listings. Contact us today!