Q:

What is a seller's closing cost?

A:

Quick Answer

Seller’s closing costs include the commission paid to the real estate professional who sold the home, loan payoff costs, recording fees and transfer taxes. Other possible costs include title insurance fees and attorney fees. Sellers must also pay any unpaid homeowner association dues, liens, judgments or prorated property taxes.

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Full Answer

The biggest part of closing costs for sellers are the commissions paid to real estate professionals for their services. This commission varies somewhat from market to market, but typically is 6 percent of the home’s sale price. Some real estate professionals are willing to negotiate on the commissions received, but this is not always the case.

Prorated interest may cause loan payoff costs to be higher than the balance remaining on the loan, and this is due at closing. In addition, banks and mortgage lenders sometimes assess a prepayment penalty on homeowners who pay off their balances before their mortgages reach full term. Sellers must pay off any home-equity lines of credit in full as part of the closing process.

Sellers who have agreed to do so may have to pay for the cost of repairs stemming from inspection of their homes. Termite inspection or remediation costs and home-warranty premiums can also run up the total when figuring up closing costs.

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