What Are Seller’s Closing Costs?
When you sell a property, it’s essential to understand the various costs associated with the transaction. One of the most significant aspects is “seller’s closing costs.” These expenses are the costs that the seller of a property must pay when concluding the sale of the home. Here, we explain some of the most common seller’s closing costs that you should be aware of.
Real Estate Agent Commissions:
One of the largest expense items for the seller is the real estate agent commissions. These commissions typically represent a percentage of the home’s selling price and are divided between the seller’s agent and the buyer’s agent. The fee may vary by location and market but usually ranges between 5% and 6% of the total selling price.
Capital Gains Taxes:
If you have made a profit from the sale of your property, you may be required to pay capital gains taxes. However, it’s important to note that many countries have tax exemptions for the sale of a primary residence if you meet certain requirements. Consult a tax professional for specific guidance in your situation.
Mortgage Payoff Costs:
If you have an outstanding mortgage on the property you are selling, you may need to cover certain mortgage payoff costs, such as legal fees or a prepayment penalty. Make sure you understand the terms of your mortgage and consult your lender about the costs associated with early repayment.
Outstanding Property Taxes:
It is common for sellers to pay any outstanding property taxes at the time of sale. These taxes are usually prorated between the buyer and the seller, and the amount you need to pay will depend on the closing date and local tax policy.
Legal and Closing Fees:
Sellers also have to cover legal and closing fees associated with the transaction. This includes the cost of hiring a lawyer or a closing agent to facilitate the property transfer.
Agreed-upon Repairs and Improvements:
If you have agreed to make certain repairs or improvements as part of the sale negotiation, you will need to cover the costs of these tasks before the closing date.
Real Estate Brokerage Fees:
In some cases, if you used a real estate brokerage to find a buyer, you may be required to pay a commission for their services. These commissions can vary depending on the agreement you have with the broker.
It’s important to remember that seller’s closing costs can vary depending on the location and the specific circumstances of the sale. Before selling your property, it is crucial to discuss these costs with your real estate agent and obtain a detailed estimate of the expenses you will face. This information will help you plan appropriately and ensure that you are ready to successfully conclude the sale.