How Much Are Closing Costs For The Seller?

If you're planning to sell your home, you'll probably want to have at least a rough idea of the associated expenses and the closing costs of selling.

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What are the costs of selling a home? If you're planning to sell your home, you'll probably want to have at least a rough idea of the associated expenses and the closing costs of selling your property.

If you ever sold or bought a home, you probably remember being taken aback by all the costs and fees associated with such transactions. While selling a home may seem straightforward, there are certain costs that a seller has to pay. You have to pay various closing costs that are required to finalize the sale. Generally, these expenses may vary based on the market and region and can either be expensive or very affordable. As a seller, it's of great importance to understand these closing costs and your obligations before you finalize the sale.

The term "closing" is such a nice word when selling a home, isn't it? It's an indication that you're just about to receive a sizable check for the sale of your house. While they can be paid by both the seller and the buyer, the seller will pay a huge chunk of the closing costs. They're a combination of taxes, fees, and prepayment services that must be paid before the title documents and ownership of the property is transferred. In short, closing costs are a variety of fees and can range between 3% and 7% of the sale price. They can include an appraisal, title search, and a credit check.

This article breaks down the closing costs typically associated with the seller.

Table of Contents

The most common closing costs for a seller include:

  • Title Insurance
  • Title Search
  • Escrow Fees
  • Attorney's Fees
  • HOA Fees
  • Prorated Property Taxes
  • Appraisal
  • Credit Report and many more

Here are the most important closing costs in more detail.

Title Insurance (Between $1,000 and $4,000)

Title insurance is essential in protecting the buyer in case there's a problem in the title after closing. It may cost between $1,000 and $4,000. This cost always depends on the sale price of the property and can vary from state to state.

There are two types of title insurance policies. The first one is the lender's insurance policy and the second one is the owner's policy. Lender's title insurance generally comes to the fore when the sale transaction involves a lending institution. The owner's title insurance involves when the owner of the property sells directly to the buyer.

Title insurance is of great importance, especially to the buyer. It protects the buyer against someone else claiming ownership over the property. This can occur either as a dispute over the property's ownership, unpaid liens from credit institutions, the government, or even contractors.

Transfer Tax (Varies)

This is sometimes referred to as government transfer tax or a title fee. It's essentially the tax amount that the seller will pay when the property's title is transferred from the seller to the buyer. This amount varies from state to state. For instance, the average transfer tax in Seattle is $8,654 while it's $36 in Denver.

Things are a little different in Massachusetts where the transfer tax is commonly known as tax stamp and will cost you $4.56 for every thousand dollars in the sale price. As you can see, transfer tax is a crucial and sometimes, a hefty part of the closing cost. This may depend on your state but it's critical to research and know what you're dealing with and how you can split this cost with the buyer.

Attorney's Fees (Varies)

It's always advisable to hire an attorney who is well knowledgeable in matters, property sales to oversee the sale. While this may be optional in some states, it can be a requirement in some states. We often insist that our readers who are looking to sell their properties hire an experienced attorney to oversee the sale as this can help them from becoming victims of fraud or wrong decisions. For instance, an attorney will help you in complex transactions such as when selling or buying an inherited property or a distressed property.

For the attorney to review the transaction document and even attend the closing with you or on your behalf, you can expect to pay somewhere between $400 and $1,200. Most sellers will try to reduce their closing costs by not using an attorney but we believe this is a huge mistake! Believe it or not, an attorney is the best insurance policy in a real estate transaction as he/she will protect your best interests.

HOA (Homeowners Association) Fees (Varies)

You're required to pay any amount that you owe HOA before the transaction can be finalized and ownership transferred. You can also pay a transfer fee to HOA to transfer the property to the buyer. The most common expense is the 6D certificate. This is to tell the buyer that the seller doesn't have any outstanding balance or fees owed to the association. Keep in mind that 6D may have different names in some states.

Prorated Property Taxes (Varies)

Property owners are expected to pay annual property taxes. The amount you pay will depend on your state and its tax laws. When selling your property, you'll be required to pay the outstanding property up to the closing date.

The buyer will take the responsibility of paying property taxes once ownership is transferred. In most cases, property taxes often go up every calendar year and may sometimes be unjustified. If this is the case, you can challenge the high property tax bill and it may be adjusted accordingly.

Escrow Fees ($500 to $2,000)

Escrow accounts are typically managed by third parties and are meant to ensure that the seller doesn't take the money without transferring ownership while the buyer doesn't take the title without paying the agreed amount.

With the services costing a flat fee ranging between $500 and $2,000 including minor administrative expenses, the escrow account will release the title and the money once all the requirements are met. This is an essential service that's generally handled by the seller but can be negotiated and split between the seller and the buyer.

Credits towards Closing Costs (Varies)

This is essential if you're selling in real estate markets that favor buyers or where buyers have the upper hand. In such a scenario, the seller may decide to pay some of the buyer's closing costs to entice the buyer and ensure that the transaction is finalized. Such costs are typically known as credits towards closing costs and are meant to attract the buyer.

In some instances, a seller may negotiate a credit in lieu of necessary fixes, especially when submitting his/her offer. You'll, therefore, have to pay the amount agreed upon closing if you accept that condition.

Appraisal ($450 to $650)

This is meant to verify whether or not the property is worth as much as the buyer is borrowing from the lender. This is important, especially when there's a mortgage involved.

Home Improvement Costs (Varies)

Another superb way of enticing the buyer to close the deal as soon as possible is by paying for repairs or renovations required to make the home attractive and up to the required standards. Whether it's improving the landscaping, servicing air conditioners, or adding a fresh coat of paints, the seller will be required to take up these costs to sweeten the deal.

Keep in mind that most real estate markets favor buyers and letting the buyer pay home improvement costs may be a deal-breaker. These costs will, of course, depend on the improvement that should be made.

When Should the Closing Costs be Paid?

As the name suggests, closing costs are due at the closing of the deal. This is essentially when all the required documents from the seller and the money from the buyer have been submitted to the escrow account and the sale can be finalized. All these costs will be deducted from the seller's proceeds of the sale, so you don't have to bring money to the closing unless your home is underwater and you still owe more than the worth of your property.

How to Reduce Closing Costs

While it's possible to avoid or share some of the closing costs with the buyer, you cannot avoid them altogether. Instead, you can use these ideas to reduce the closing costs.

Go for cheaper Escrow accounts - As we noted earlier escrow fees may vary between $500 and $2,000 and are generally set by the escrow company. As such, you can shop around for a cheaper escrow company or even negotiate for a cheaper escrow fee.

Use a Discount Broker - You can use a limited-service or discounted broker and save the money that goes into listing your property.

Request a Title Insurance Reissue Rate - You should take advantage of reduced rates on your owner's title policy if you qualify for it.

Pay Your Property Taxes in Time - Do not let your property taxes accrue as this will eat into your sale price when closing the deal. The best thing to do is to pay property taxes in time and you'll be good to go when selling.


As a seller, it may be a very bad decision to go into the closing without necessarily knowing what your closing costs as a seller are going to be. As such, make sure that you have a proper estimate of what your closing costs can be before going into the closing. The best thing is to seek the services of an experienced real estate attorney to guide you on how to deal and reduce these closing stocks without breaking the deal.

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