Key Insights into Closing Costs for Home Sellers in the Metro-East Area

Selling a home is an exciting milestone, but unexpected expenses can throw off your budget. Picture yourself at the closing table, ready to receive your sale proceeds, only to find a substantial chunk taken out for closing costs. This scenario highlights the importance of being prepared for these expenses, so you’re not caught off guard.

In this post, we'll explain the common costs sellers typically pay, why they exist, and how you can keep more of your money when you sell your home in the Metro-East area.

What Are Closing Costs?

Closing costs represent the final expenses required to complete the sale of your home. These costs encompass various fees such as title transfers, legal fees, and other essential services. Generally, sellers can expect to pay between 6% to 10% of the home’s sale price in closing costs.

Understanding these expenses ahead of time can help you budget correctly and avoid any last-minute surprises.

The Most Common Closing Costs for Home Sellers in the Metro-East Area

1. Transfer Taxes and Recording Fees

Transfer taxes are fees imposed by the state and local jurisdictions for legally transferring ownership of your home to the buyer.

• How much do transfer taxes cost? The cost varies but generally ranges from 0.5% to 2% of the sale price.
• Who pays these taxes? In many cases, the seller covers this cost, but buyers may sometimes cover some or all of it, depending on the agreement.

2. Title Insurance (Owner’s Policy)

Title insurance protects the buyer from any ownership disputes or legal claims on the property. Although buyers usually purchase their own policy, sellers often pay for an owner's title policy as part of the sale agreement.

• Is title insurance mandatory? It’s not mandatory, but it’s a common expectation in home sales.
• Cost: Usually between 0.5% to 1% of the home’s sale price.

3. Escrow and Closing Fees

Escrow services are responsible for handling the funds and documents involved in the transaction, ensuring a secure process. These fees also cover the final paperwork necessary to transfer ownership.

• What do escrow companies do?
• Hold funds in a secure account.
• Ensure all contract terms are met before money changes hands.
• How much do these fees cost? Between $500 and $2,000, depending on the location and provider.

4. Prorated Property Taxes

Since property taxes are paid annually, you’ll need to cover your share up until the closing date.

• How is it calculated? The total property tax bill is divided based on the number of days you owned the home that year.
• Example: If property taxes are $6,000 annually and you sell halfway through the year, you’d owe $3,000 in prorated taxes.

5. Homeowners Association (HOA) Fees

If your home is part of an HOA, expect additional fees at closing.

• Unpaid dues: Any outstanding HOA fees must be settled before the sale can close.
• Transfer fees: Some HOAs charge between $200 to $1,000 to process the ownership change.

6. Attorney Fees (if required)

In certain states, you must hire a real estate attorney to review and finalize the sale.

• Cost: Typically ranges from $500 to $1,500.
• What do they do?
• Review contracts and closing documents.
• Ensure the transaction is legally sound.

How to Reduce Your Closing Costs

Closing costs can take a sizable chunk out of your home sale profits, but the good news is that there are ways to cut back on these expenses. Whether through negotiation, strategic choices, or finding cost-effective service providers, you have options to keep more money in your pocket. Here are some practical ways to lower your closing costs as a seller.

Sell Without an Agent (FSBO) — this means no listing agent commission. However, you’ll still need to:

• Pay the buyer’s agent commission (usually 2.5% to 3%).
• Handle marketing, negotiations, and paperwork yourself.

FSBO works best if you have experience in real estate or a buyer already lined up.

Ask the Buyer to Cover Some Costs

• In some deals, buyers agree to cover certain closing costs instead of negotiating a lower sale price.
• This works best in a seller’s market, where buyers compete for homes.

Shop Around for Service Providers

• Get multiple quotes for title insurance, escrow services, and attorneys.
• Some companies offer discounts for bundled services.

Preparing for Closing

As you approach the finish line of your home sale, there are still a few final steps to take before closing day. Proper preparation can help avoid last-minute surprises and ensure everything goes smoothly. Here’s what you need to do before handing over the keys.

1. Review the Closing Disclosure Early

• You’ll get a Closing Disclosure a few days before closing that lists all costs.
• Review it carefully to catch any unexpected charges.

2. Finalize Repairs and Paperwork

• Complete any agreed-upon repairs before closing.

Make sure liens, HOA fees, and taxes are paid to avoid delays.

Final Thoughts

Selling a home involves more than just finding a buyer. Closing costs can quickly add up, but understanding these expenses and planning ahead can help you maximize your profit when selling in the Metro-East area.