I Want to Sell My House. What Kind of Closing Costs Should I Expect?

Coming to the decision to sell your house and either move up, move down or move out can be a stressful decision.  It’s stressful because there are often so many unknowns involved.  What is my timeframe?  What will my house sell for?  Will I have to bring money to closing?  Oh, closing…what will my closing costs be?

Well closing costs when selling a house don’t have to be shrouded in mystery.  Most good agents can come reasonably close to being able to tell you what to expect for your particular house but here are the basics of what goes into closing costs.

1. Title Insurance–title insurance is an insurance policy that protects the buyer from anyone coming back and taking the house for a previous lien.  The cost of this insurance policy is regulated by the state and is associated with the value of your house.

2. Property Taxes–Property taxes are paid to the rear.  That means that if you decide to sell your home in October, you owe for the previous 9 months of taxes and that money goes to the new buyer.  This cost may not be readily seen because in most cases people escrow this into an account and they get the money back from their mortgage holder after closing.  It does, however cost at the time of closing.  That’s why it’s technically “CHEAPER” to sell your home in January than it is in November!

3.  Buyer assistance fees–these are negotiable and are costs associated with the buyer getting their loan.  These fees may be straight seller contribution, contributions through a non-profit down payment assistance program (until October 2008) or possibly FHA required assistance if the buyer is using an FHA program for their mortgage.

4. Agent fees–Agent fees are negotiable but for FULL service agents you will likely see between 5% and 7%…some are higher and some are lower.  These fees are actually split between the agent you hire to market and sell your home and the agent that brings a buyer.  Sometimes the agent who is marketing your home will also be the agent who brings the buyer and if they are, then you may have negotiated a DUAL-VARIABLE RATE commission, meaning you pay a lower commission.

5.  Home Warranty–this is a warranty plan that transfers to the new buyers that a seller will often provide.  It’s not a COVER EVERYTHING plan, but it does help to ease the stress if something goes wrong in the first year of the home ownership of the new owner.  These currently run about $400…more for better coverage or if Pools and Spas are included!

6. Home repairs– During the buyer’s inspections, they may come up with a list of things that they want to have repaired by the seller before they close on the house.  Usually these do not tally up to be a lot but the wise seller will have allocated about $500 to help defray those costs WHEN the buyer asks for repairs.

7.  Misc fees associated with the title company actually doing the closing.  These fees are going to include documentation preparation and attorney fees, courier fees and actual closing fees…these vary from title company to title company.

Well, that’s pretty much an overview of what to expect as far as closing costs associated with selling your home goes.  If you have any questions, please feel free to give us a call or send us an email on our webpage at www.katyagent.com.

Photo by Tracy Olson