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Know The Costs Before You Sell Your House

Posted Monday, January 5, 2015

Before you call a real estate agent and say, "Sell my house," you need to be aware of the costs involved in selling. It can be very disappointing to expect to receive a certain amount from the sale, only to find out that your actual proceeds are considerably less. 

What items can the seller be required to pay at closing?

1. The real estate commission 

The seller pays the commission to the real estate agent(s) who list and sell the house. This fee is typically between 3% and 7% of the selling price, with 6% being the average. Sometimes, you can negotiate a lower fee, but any negotiation must be done prior to signing a contract or listing agreement with the selling agent.

2. Title Insurance

In most cases, the seller is required to furnish title insurance to the buyer. This insurance serves as a guarantee to the buyer that the title is clear and that there are no unpaid loans, liens, finance charges, judgments or title defects at the time of the sale. Depending upon the price of the house and where you live, this typically costs between $400 and $1500.

3. Closing fees

The company who performs the closing, typically a title company, finance company or an attorney, will charge a fee for their services. They are responsible for getting all of the necessary paperwork together, making sure it is properly signed and notarized and dispersing all of the funds to the proper recipients. For these services, they will normally charge between $200 and $800.

4. State and local government fees

Each time ownership changes on a home, the change must be recorded with the state or local authorities. Some states have laws as to who must pay the recording fees, the seller or the buyer. If there is no law in place, this cost can be negotiated at the time you sign the contract for sale.

5. Other costs

The seller will be required to pay all of the property expenses such as mortgages, taxes, insurance, utilities, etc. up to the date of the closing. If you have an escrow account with your mortgage holder for some of these expenses, the amount it holds will be refunded to you after the sale has been completed.

Before you call an agent and say, “Sell my house,” you need to learn exactly what to expect so that you don’t receive an unpleasant shock at the closing table.