As a seller, you want to do everything you can to put more money in your pocket. You can do this either by increasing the sale price of your home or by avoiding closing costs. You may increase the value of your home through repairs, but they’re time-consuming and pricey. Alternatively, high-quality marketing requires you to hire a high-commission, expensive listing agent.
Fortunately, there is an easier way to make sure you get the most value out of your home as you can — decrease your closing costs. Here, we’ll go over some strategies to minimize or even avoid some of these costs.
What Are Closing Costs?
Closing costs are costs associated with the sale of a home other than the cost of the property itself. This includes the costs associated with finding realtors and attorneys, transferring the title of the house, and home inspections.
Closing costs are typically about 1-5%* of the home’s value, though they can vary widely depending on where you live and the current real estate market.
Which Closing Costs Does the Seller Pay?
The buyer typically covers most closing costs, but sellers still have to pay a fair share when selling a home. As a seller, you can expect to pay some or all of the following closing costs in most traditional home sales:
Commission: Sellers must pay their listing agent a commission for listing and advertising their home. Typically, a commission is a percentage of the final sale of the house. In most cases, the real estate agent’s commission is the seller’s largest closing cost.
Title search and title insurance: Title searches and insurance ensure that the seller is legally able to sell the home, and protects the buyer in case there is a future dispute. In some markets, the buyer may cover this cost.
Transfer taxes: In some places, selling a home requires the payment of a transfer tax, which is a fee that you must pay anytime a piece of real estate changes hands. These taxes are required by the state, city, or local government and are often covered by the seller.
Homeowners Association (HOA) fees or dues: Some HOAs charge a transfer fee when a home changes hands. Additionally, some sellers cover the HOA fees for a few months or a year after the closing date.
Home repairs: In some cases, you, the seller may have to cover the cost of significant upcoming home repairs or issues that arise during the buyer’s inspection. This may include roofing issues, plumbing problems, and much more.
Outstanding mortgage balance: As a seller, you must pay off the remainder of your mortgage before selling your home. Typically, this is subtracted from the amount the buyer pays for your home, reducing your overall sales profits.
Real estate attorney fees: Some states require that you have a real estate attorney present during the sale of a home, which will incur an additional cost. Depending on the area and the real estate market, the seller or buyer may cover this cost.
Local legal fees: Some towns, cities, or counties may charge unique fees associated with the transferring of title property. Check with a local real estate expert if you’re unsure of the laws in your area.
Ways Sellers May Reduce Closing Costs
Closing costs can take thousands of dollars out of your pocket as a seller. Fortunately, there are several methods you can use to minimize or avoid these costs.
Consider Many Realtors
One of the simplest ways to reduce closing costs as a seller is to find a realtor or listing agent with a low commission, as realtor commissions make up the largest portion of these costs. Talk to several real estate agents and offices to find a commission rate that works for you.
Negotiate Your Realtor’s Commission
Listing agents often have commissions of about 5.5%, which can make a serious dent in a seller’s profits. Realtors often charge the same commission rate to all of their clients, but it may be possible to negotiate. Consider talking to your listing agent to see if they’re open to lowering their commission.
Sell Your Home As-Is
Selling your home “as-is” ensures that you won’t be responsible for home repairs, even if issues arise during the inspection. This protects you in case issues arise after the sale is finalized.
Sell Your Home Yourself
Ultimately, the biggest closing cost for sellers is the listing agent. If you sell your home yourself through an FSBO (for sale by owner) sale, you may be able to cut down on about 50% of your closing costs.
FSBO sales still have some closing costs, even if they are significantly reduced. For example, you’ll still want a real estate professional to oversee the transaction to ensure you’re abiding by all rules and regulations and protecting yourself from potential scams.
As an FSBO seller, you may still have to pay some or all of the following:
- HOA fees or dues
- Real estate attorney fee (required in some states)
- Title search and title insurance fees
- Inspection fee (unless waived or covered by the buyer)
- Prepayment of taxes and home insurance
- Home appraisal costs
Sell Your Home for Cash
The easiest way to avoid closing costs is to sell your home for cash. Selling your home for cash means you don’t have to deal with mortgages, lenders, or banks, lowering the number of closing costs significantly.
Some closing costs, such as survey fees and transfer taxes, still apply, even when you don’t involve any lenders in the sale. Fortunately, many companies that buy homes for cash will cover these fees for you.
Avoid Closing Costs With Grandview Homes
At Grandview Homes, we cover all the closing costs when you sell your home to us, meaning more money in your pocket. If you’re looking to avoid closing costs the easy way, contact us today to get a fair cash offer in as little as 24 hours.
* Data based on reports from Closingcorp.