5 Closing Costs to Be Aware of When You Sell Your Home

5 Closing Costs to Keep in Mind When You Sell Your Home in Ellicott City, Columbia, Owings Mills, Pikesville or Catonsville

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There are always closing costs associated with selling a home, no matter where you are – but there are five pretty substantial costs you’ll have to plan for when you’re counting the profits on your home sale. Here’s what you need to know.

Your REALTOR® can talk to you about the cost of selling your home, but here are five fees to watch for:

Real estate commissions
Loan payoff costs and prepayment penalties
Title insurance fees
Transfer taxes and recording fees
Attorney’s fees

Here’s a closer look at each, which typically total between 6 and 10 percent of the home’s sale price.

Closing Cost #1: Real estate commissions

When you sell your home, the agent who sold it and the agent who brought the buyers both get a commission. Usually, the seller pays real estate commissions for both parties. Typically, they add up to between 5 and 6 percent of the home’s sales price. That means on a $200,000 home, commissions add up to about $12,000. That commission is divided between both sides of the transaction – the buyer’s agent and the seller’s agent – and those agents typically pay their broker a cut of their own commissions.

In some cases, the agent who sells a home is also the one who brings in the buyer. That’s called dual agency. That doesn’t happen very often, though.

Closing Cost #2: Loan payoff costs and prepayment penalties

When you sell your home, your loan payoff is usually a little bit higher than your remaining balance. That’s because your remaining balance doesn’t include the prorated interest charges – but those will be tacked on when you get your payoff quote. (That’s why it’s important to get an actual payoff quote from your mortgage lender; your lender will quote you the amount with the prorated interest charges, so you’ll know how much cash it’ll take to close out your loan.)

You may also have to pay a prepayment penalty. Some lenders charge prepayment penalties when you pay off a loan early; it’s a way for the lender to make some of the money it was going to make on interest if you’d let your loan live out its full lifespan. (Some government-backed loans, such as VA loans, don’t allow lenders to charge you a prepayment penalty.)

Finally, if you have a home equity line of credit, or HELOC, you’ll probably have to pay that off in full before you can sell your home to someone else.

Related: What is a VA loan?

Closing Cost #3: Title insurance fees

Sellers usually pay for the buyer’s title insurance premium. The cost can vary quite a bit, ranging from a few hundred dollars to over $1,000. You don’t always have to pay for this, but it’s something to keep in mind when you’re selling your home. It’s a good idea to talk to your REALTOR about whether that’s something you’re going to end up coming out of pocket (or out of profits) for.

Closing Cost #4: Transfer taxes and recording fees

Transfer taxes are imposed by state and local governments for transferring a title to a home. They’re not the same on every transaction, so it’s important to talk to your REALTOR about what you may have to pay when you close. You may also have to pay recording fees.

Closing Cost #5: Attorney’s fees

If you have an attorney representing you during the transaction, you’ll have to pay his or her fees at closing. Your lawyer’s fees may be negotiable (it doesn’t hurt to ask).

Are You Selling a Home in Ellicott City, Columbia, Catonsville, Owings Mills or Pikesville?

If you’re selling your home, we can help. Call us at 443-955-1227 or 410-465-5822 to find out how we’ll put your home in front of qualified buyers – and how we’ll help you sell it for the best possible price. If it’s easier, fill out the form below and we’ll get back to you!