One of the most popular questions readers have is about Seller Closing Costs. While most sellers understand that they’ll pay some closing costs, they don’t always understand just how many costs they’ll pay. In this story, we’ve updated our seller closing costs, so they’ll be more useful to you. Last updated July, 2019.

You can hate to pay them, but as a seller, you can’t avoid closing costs on the sale of a home. The list of closing cost fees that a seller has to pay can seem endless. They can really add up to an enormous sum and deprive sellers of their hard-earned home equity when they sell a home. High closing costs and fees can cut into the profit a seller is expecting to pocket from the sale of his or her home or increase the amount of money the seller needs to come to the closing if the seller owes more money on his mortgages than the amount he or she will net from the sale of the home.

To help you in figuring out your seller closing costs, take a look at the end of our column for a useful link to Chicago Title’s calculator for estimating some closing costs.

Seller Closing Costs: Updated July, 2019

A buyer’s closing costs might typically range from 2 to 7 percent of the sales price, or $2,000 to $7,000 on the purchase of a $100,000 home. A buyer’s closings costs will depend on whether a buyer decides to borrow money to purchase a home or pay with cash. Cash buyers avoid all of the expenses having to do with a lender and a loan. And those lender fees are exponential, especially when you end up paying for title insurance and the many costs that a title company or settlement agent will burden you with.

But seller closing costs are often far more expensive, simply because most sellers use a full-service agent to sell their home, which can add an additional 4 to 7 percent to the closing cost total. (Even a discount broker will charge 2 to 3 percent of the sales price to sell your home, which will also add to your seller closing costs.)

The list of closing costs can add up to several dozen items. As more and more businesses unbundle their fees, you end up paying more. You can think of it like the airlines. At one point you paid for your airline ticket and you got a seat, seat assignment, the right to check bags, the right to carry on bags, a meal and other amenities. Now, you may pay for your ticket, but the fees go on and on. Here is a list of some of the items you can expect to pay as a home seller:

Seller Closing Costs: Real Estate Broker Fees

* Broker’s commission. If you’re using a full-service brokerage firm, expect to pay anywhere from 4 to 7 percent of the sales price. If you’re using a discount broker, or if you’ve sold by-owner, your cost may range from a few hundred dollars to 3 percent of the sales price. Some discount brokers might charge you a fee only to put the home on the multiple listing service for a nominal amount, say $199 or so.

* Broker’s processing fee. In some markets some full service brokers are now charging a fee to process the paperwork relating to the sale of the home. This fee can be range from a low fee of $95 to a huge fee of $495.

Seller Closing Costs: Lender Fees and Charges

* Cost of the survey. Sellers in some states are responsible for giving the prospective buyer a plat of survey of the property. The price for a plat of survey can range from $400 to $750. While not all states have the custom of having the seller deliver a plat of survey to the buyer, some states have increased surveying standards and survey fees have increased.

* Recorded release of mortgage. As a home seller, you need to pay off your old mortgage, home equity line of credit (HELOC) and other liens that affect your property. To release each one of those liens, you may have to file a lien release document and the cost to record that document can range from $20 to $150.

* Interest on loans to be paid off. Home sellers often forget that the interest owed on most home mortgages and home equity line of credits (HELOC) are paid in arrears. That means that you pay the interest on that loan not in advance but for the month that just ended. Your June 1st payment to your lender paid interest on that loan through the end of May. So a closing on June 15, will require you to pay up interest at the closing through June 15 or the date the lender actually receives the loan payment. A seller thinking his loan balance is $111,111 will be surprised to find out that his actual payoff to his lender at closing will be more than that amount. On FHA loans, you’ll need to remember that your payoff is accepted on the first day of each month, so if you close mid-month, you may end up having to pay interest for the balance of the month even if you pay off the loan early.

* Lender fees. Most lenders now charge a fee to fax the demand statement or payoff statement to you or the closing agent. When you go to sell your home, you need an official statement from your lender itemizing to a specific date the amount of money needed to pay off your debt. Most lenders will mail the payoff letter to you for fee, but may charge up to $50 to email or fax the payoff letter to you.

* Prepayment penalties. If you obtained your mortgage during the last several years, you might be surprised to find out that your loan has a prepayment penalty. This prepayment penalty can be quite high. In some cases, the penalty can be as much as 3% to 5% of the amount of the loan. In other cases, the penalty can be an amount equal to six months’ interest payments. While prepayment penalties can decline during the time you have a loan, you should know if your loan has a penalty and what it is. You don’t want to put yourself in the position of having to close on the sale of your home one month too early and having to pay the penalty where the penalty would have ended a month later.

* Courier fee to pay off loan. Most closing agents now charge a fee to send the loan payoff to each lender. In some cases these fees are much more than what their actual cost is to pay the courier company. This fee is typically between $30 to $50 or more per loan payoff. (For buyers, you should know that in the old days of paper files, a lender would send its entire printed loan package to the settlement or closing agent. Now, the settlement or closing agent may receive an email and has to print the loan package for you to sign. For this work, some settlement and closing agents may charge a fee of $50 or so. As a seller, you won’t have to worry about it, but it’s worth mentioning to sellers, as they usually turn around and buy something.)

Seller Closing Costs: Title Charges and Transfer Fees

* Title insurance. In some states the seller must provide a policy of title insurance for the buyer. The cost of the policy depends on the sales price of the home and its cost can vary from a couple hundred dollars to several thousand dollars. Some title companies have added additional charges to the basic title charge. These fees go by the name of “update fees,” “policy issuance fee,” “endorsement fees” and the like. Some fees are as low as a couple of dollars and others up to $200. It’s hard to give you examples of what it will cost you to pay for the title insurance you might be required to provide. Say, for example, you are in Illinois and you are selling a home for $500,000. You might have to pay a fee to the title company for the owner’s title insurance policy of up to $2,500, in addition to some other title company fees.

* Local city, town or village property transfer tax; county transfer tax, state transfer tax, state capital gains tax. The tax man cometh, and it could cost you, although the charges vary from municipality to municipality. In Illinois, the seller picks up the county tax ($.50 per $1,000 of sales price) and the state tax ($1 per $1,000 of sales price), and in some local municipalities, the seller also pays for a local transfer tax. In general, property transfer taxes can range from nothing to $10 per $1,000 of the sales price or more, or you may be assessed a flat fee. In some places, you have to pay a tax on the capital gains generated by the sale of your home.

* Notary fees. As more and more fees get piled on, now even notary fees are coming into play. In some parts of the country, documents for a real estate closing must be notarized. You, as a seller, must sign the documents before a notary and the notary may charge a fee for this service. While this fee might have been free in the past, in some places, notaries may now charge up to $25 to notarize a document.

* Attorney’s fees. If you choose to use an attorney, you’ll either pay a flat fee starting around $500 or by the hour.

*FHA fees and costs. All FHA fees used to be the responsibility of the seller, but they are now negotiable. But if the buyer can’t pay the fees, and the seller refuses to kick in a few bucks, the lender may not fund the loan.

Seller Closing Costs: Condo, Co-Op, and Association Fees

* Condo/co-op move-out fee. A building charge that can range from nothing to more than $400. Some cooperative buildings can charge a percentage of the sales price to permit the sale of the coop. In some instances these fees can be as much as three percent of the sales price.

* Association transfer fees. Often required for condominium and townhouse buyers. Sellers usually are stuck with some of these fees as well. Some of the fees are for processing the sales papers, move-out deposits, preparation of closing documents and even inspection fees.

* Paid utility bills. In many areas, local municipal officials will not let you close until you have proven that you are current on your utility bills. The charge for each copy of a paid utility bill, including water, sewer, garbage or electricity is $10 to $50. In some cases, companies can assist a seller in obtaining the proper documentation for the sale and can charge up to $150 to assist in obtaining the documents from the local governmental offices.

* Certificate of compliance with building and zoning codes. Your local municipality may charge for inspecting your home prior to the sale to insure that it meets up to date requirements. Such inspections can cost a nominal amount or run more than several hundred dollars plus the cost of fixing any items that are non-compliant. In addition, some municipalities charge a fee to verify the number of dwelling units permitted at a home being sold. The cost of such certificate can be nominal, but it may be a hassle to obtain the certificate. If the code inspector finds problems with the home, you might have to pay to make repairs to the home and then have the code inspector come back and verify that the home satisfies the requirements under the local ordinance.

* Association reserves. In some areas, the reserves held by condominium or homeowner association are credited to the seller on the basis of the seller’s percentage of ownership in the association. Fortunately, for the seller, this is one of the few instances of money coming back to the seller rather than a payment by the seller.

* Special assessments to associations. In many associations, if a special assessment has been levied, even if it can be paid over many years, the association will require that the assessment be paid in full at the closing.

Seller Closing Costs: Home Inspection and Home Warranty Fees

* Home inspection fees. In some areas, local custom dictates that the seller pay for septic system, lead, pest, radon and fire and other inspections, which can range from $25 to $500 each. If there are problems with the home, you may have to fix the problems at a substantial cost. While radon tests can cost under $200, septic system test and well water tests can be more extensive and expensive depending on the system. Pest inspections and lead based paint inspections usually are relatively inexpensive.

* Home warranty. In California, most existing homes are sold with a home warranty, which guarantees to the buyer that all of the mechanical and electrical appliances are working on the day of closing and are guaranteed to work for the first year of ownership. The cost for a home warranty starts around $500 and can increase as additional option items are added. While your home may not be located in California, home warranties are becoming more popular in other states as well, so don’t be surprised if your buyer requests that you pay for one. These home warranties may have deductible payment that the buyer will have to make to obtain service from the warranty company.

Seller Closing Costs and Credits

* Credit to the buyer of unpaid real estate taxes. Depending on how and when property taxes are billed in your state, it’s possible that you will have to credit the buyer for real estate taxes that were for the time period you owned the home but will be billed after the closing date of the sale of your home. The longer it has been since the seller last paid his real estate taxes, the more money the seller might have to pay the buyer at closing to give the buyer the money needed to settle up with the buyer. In states where winter/summer taxes vary or where they have school taxes and winter taxes, the amount you might need to give to the buyer may change. In some cases, if you’ve paid the money for taxes, the buyer may end up owing you money. You need to understand and know how real estate taxes work to know whether you’ll owe or receive money at closing for this closing cost item.

* Other credits to the buyer. In some cases, sellers give credits to the buyer for things that don’t work, or don’t look nice, in their home. For example, if the buyer’s inspector finds something wrong in the house, you may negotiate a credit to the buyer that will be paid at the closing. The cost of this will vary.

* Upside down loans and short sales. When you are upside down on your mortgage (that is, owe more on the mortgage than the house is worth), when you find a buyer for your home, and the amount being paid for the home will not entirely pay off your mortgage, home equity loan or line of credit, you’ll have to come to the table with cash in hand. If the lender “forgives” your loan in this short sale transaction – that is the lender agrees to take a sum that is less than the full amount required to pay off the loans, you will have successfully completed a short sale. Currently the IRS has allowed that phantom income – the amount of the debt that is being forgiven to you – to not be taxed as income. In the old days, that phantom income was taxed to you. Remember these rules are changing frequently and in some cases as a home seller the IRS rules may apply to primary residences but not other homes or investment properties. Talk to your tax preparer for more details.

Seller Closing Costs: Keep a List

It’s important to keep a list of your seller closing costs, as well as a copy of all your purchase and sales documents, so that you can accurately figure out your home’s cost basis. For more details on what proof you’ll need for your tax return (and a possible audit), check out IRS Publication 523, “Selling Your Home.”

More Seller Closing Costs to Think About

While this list includes many of the seller closing costs you’ll encounter it does not include all of them. Closing fees vary from state to state, county to county, city to city and even within a city. When planning your sale, talk to your real estate agent or real estate attorney to get a better idea of what closing fees might affect you when you sell your home.

We hope this list of updated seller closing costs helps you as you plan your home sale. Some title companies have some tools to help home sellers more closely estimate some of their closing costs. If you plug in some of your information, the online calculator can give you a listing of some of your estimated costs. We can’t tell you whether the calculator is accurate for every location, but it’s a good start.

Chicago Title seller closing cost rate calculator CLICK HERE

Good luck with your sale.