When selling a property, it’s essential to understand the various costs associated with the transaction. One of the most significant aspects is the “seller’s closing costs.” These expenses are the costs that the seller of a property must pay upon concluding the sale of the home. Below, we explain some of the most common seller’s closing costs that you should consider.
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 sale price and are split between the seller’s agent and the buyer’s agent. The fee can vary depending on location and market but usually ranges between 5% and 6% of the total sale price.
Capital gains taxes:
If you have made a profit from selling your property, you may need 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 certain requirements are met. Consult a tax professional for specific guidance in your situation.
Mortgage payoff costs:
If you have an outstanding mortgage on the property you’re selling, you may need to cover certain mortgage payoff costs, such as legal fees or a prepayment penalty. Make sure to understand the terms of your mortgage and consult your lender about the costs associated with prepayment.
Outstanding property taxes:
It’s common for sellers to pay 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 need to cover legal and closing expenses 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 agreed to make certain repairs or improvements as part of the sales negotiation, you’ll 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 agency to find a buyer, you may need 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 location and the specific circumstances of the sale. Before selling your property, it’s crucial to discuss these costs with your real estate agent and obtain a detailed estimate of the expenses you’ll face. This information will help you plan accordingly and ensure you’re ready to successfully conclude the sale.
