Although a home seller's required closing fees tend to vary in different regions, a seller usually covers several traditional closing costs. These costs are in addition to any loan payoff amounts or liens placed on the property. Sellers can usually get a worksheet from their real estate agent or title company of choice that gives a break down of estimated closing costs long before arriving at the closing table.
Escrow or Attorney Fees
In certain areas of the country, attorneys are required to handle real estate closings, while other areas require a third party escrow company. Depending on the state, these third party companies may be a title company, escrow agent, real estate agent, or lender. This basic escrow handling fee is typically split between the buyer and the seller. Whichever party is handling your transaction should be able to give you an accurate estimate of escrow fees based on the purchase price and type of transaction.
The seller is usually required to pay for the cost of an owner's title insurance policy. This could be supplied by either an attorney, or title company depending on the state. A title insurance policy will ensure that the title of the home has been researched for any outstanding liens or claims of ownership against the property. This is also referred to as "clearing the title," and will protect the new buyer against any previous claims up to the full value of the property.
Transfer or Documentary Tax
Don't forget about Uncle Sam! Your local government agencies such as state, county or city will also receive a chunk at the closing table. In many areas, this tax is called a transfer fee, but similar terms such as re conveyance tax or excise tax may also be applied here. Check with your real estate agent or escrow company to see how much these fees will take out of your proceeds. This amount is typically based upon a percentage of the purchase price.
Real Estate Commissions
Although it may seem like your real estate agents work for free, you might have a rude awakening at closing. This amount may be one of the largest portions of your closing fees. Try to keep in mind that your house may not even be sold without your agent's efforts. This portion of seller closing costs may run from 5 percent to 7 seven percent of the purchase price of the home, and is usually split between the listing agent, selling agent and their respective brokerages.
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