Closing costs refer to all the expenses associated with a real estate transaction. The fees owed by each party depends on the agreed upon purchase price, contract terms, and even location. Needless to say, if you don’t know what you’re looking for, understanding your closing costs can be a bit overwhelming. This blog, Seller Closing Costs Explained, breaks down the closing costs on the seller’s side to help you better understand all fees associated with your real estate transaction.
Seller Closing Costs
The seller’s closing costs vary depending where you live, and typically run anywhere between 6-10% of the home’s sale price. These fees are deducted from the sale proceeds, so in most cases, sellers do not have to bring any money to the closing table. However, if you don’t have much equity in your home, and closing costs exceed your profits, you may end up having to bring a check to closing to cover the difference.
There are typically ten sections to a standard settlement statement in Ohio:
The financial section lists the agreed upon sales price of the home and will appear as a credit to the seller. All subsequent closing costs will be deducted from this amount.
2) Prorations & Adjustments
This part of the settlement statement lists the outstanding HOA dues and property taxes due at closing. Most property taxes are paid in arrears, meaning your 2018 taxes are not due until 2019. Therefore, if your closing is on March 1, you will have to pay a pro-rated tax bill for January 1-February 28. Because of this, the amount of taxes due can vary significantly based on the exact date of closing.
3) Loan Charges
Loan charges pertain to buyers only, and will list the costs they owe for their new loan.
4) Other Loan Charges
This area lists any additional fees owed by the buyer for their loan.
The impounds portion of the settlement statement also pertains only to the buyers, and lists the amounts owed for any home owners insurance and county property taxes needed at the time of closing on their loan.
6) Title Charges & Escrow/Settlement Charges
All fees charged directly by the title company appear in this section. The most significant title fee is the owner’s title insurance policy, which is typically paid for by the sellers in Central Ohio. Title insurance rates are set by government and typically cost about 0.5% of the sale price. Click here to calculate your exact rate.
Other title fees include:
- Title Settlement Fee: $150 – $250
- Title Search/Exam Fee: $200 – $250
- Title Insurance Binder: $50
- Title Update Fees: $0 – $100
- Courier Fees: $0 – $50
- Total: $400 – $700
This section lists the real estate commissions owed by the Seller. This amount depends on what you negotiated with your Realtor. Commissions generally run 4-7% of the sale price, and are split between the listing agent and the buyer agent.
8) Government Recording & Transfer Charges
This area accounts for the recording fees (usually paid by the buyer), and the transfer taxes owed to the county (typically paid by the seller). Transfer tax is determined by the county the property is located in. In Franklin County, the transfer tax is $2 for every $1,000 of the sales price.
The payoffs section lists the amounts the Seller owes to pay off any mortgages and/or liens they have on their home. For example, if you owe $200,000 on your current mortgage, this amount will be deducted from your sale proceeds.
10) Miscellaneous Fees
The miscellaneous portion of the settlement statement includes a list of miscellaneous fees. Below are some examples of common miscellaneous charges:
- Document Preparation Fees: $50 – $100
- Home Warranty Plan: $450 – $700 (if part of the purchase contract)
- Seller Paid Closing Costs: buyers will often ask the sellers to pay for their closing costs; if you agree to this in the purchase contract, it will be notated here
- Additional Brokerage (Document Storage) Fees: $200 – $300