What Are The Closing Costs For The Real Estate Seller?
Selling a home is an exciting process that can also be quite stressful. The last thing you want to worry about is how much all of the closing costs are, but it’s important to understand all the costs involved in selling your home so that you can budget accordingly. Here we’ll break down some of the most common closing costs for sellers and talk about where they come from:
Title Service Company
The title company is a company that you hire to help you close the sale of your home. They will clear up any issues with the title, and they’re licensed and regulated by the state in which they operate. The buyer pays for their services, not you (the seller).
Government Recordation Charges
The government charges a fee to record the deed, mortgage, and lien release. In some counties, the government also charges a fee to record the lien assignment. The amount of these fees vary by county; however, they can be as much as $300 or more per document.
Transfer taxes are a percentage of the sale price that you pay to the city or county where your property is located. The rate varies by location, but it’s usually around 1% of the sales price. If you live in a rural area with few homes on the market, this may not be as high as it would be if you lived in a city like Chicago or New York City.
The transfer tax is usually paid by the seller and should not be split between buyer and seller unless both agree to do so beforehand (which isn’t recommended). If there’s any confusion about who should pay what portion of the transfer taxes during the closing, it’s best to hire an experienced real estate attorney for advice on how much each party needs to contribute.
An escrow fee is a cost of having a third party oversee the sale and make sure that all parties are treated fairly. It’s paid at closing, but it’s not always included in the seller’s closing costs.
The amount of an escrow fee will vary depending on where you live and who you use as your title company or real estate attorney. In some cases, this may be bundled into another fee that includes other closing costs (i.e., prepaid interest), but it’s charged separately in some states.
Owner’s Title Insurance
Title insurance is a type of insurance that protects the owner against any losses that may occur due to defects in the title of a property. Title insurance is not required by law, but it is recommended. Without title insurance, a homeowner has no financial recourse if they have an issue with their home’s ownership being compromised through legal means. For example, if you buy a house and later find out that someone else owns part of your lot line or they own something on your land (like trees or other structures), then you don’t want to be responsible for paying them money for whatever portion of their property encroaches onto yours. Title insurance would cover this situation if it happened after closing—the policy will pay for any legal fees associated with fixing the problem or even compensating you if needed!
The closing costs for the real estate seller are not all that big of a deal. The buyer or seller has to pay these fees, but they are fully disclosed in the contract and usually have a contingency built into them.
The only thing you should worry about when going through this process is ensuring that everything is documented properly and that there aren’t any surprises when it comes time for payment. If there are issues with an escrow account or anything else like that, make sure it gets taken care of before signing on any dotted lines!