You’ve cleaned, staged, marketed, and negotiated — and now you’re just one step away from handing over the keys. But before you pop the champagne, there’s one more part of the home-selling process you need to understand: closing costs.
For many sellers, closing costs are an afterthought — until they see the final numbers and realize just how much they can impact their bottom line. While buyers typically shoulder a larger share of these costs, sellers still have important financial responsibilities to cover before the deal is done.
Whether you’re selling your home through an agent or on your own (FSBO), knowing what to expect — and budgeting for it — will help you avoid last-minute surprises and walk away from the closing table with confidence.
🏡 What Are Closing Costs?
Closing costs are the fees, taxes, and expenses that must be paid to complete a real estate transaction. They’re the final financial obligations that turn an accepted offer into a legally binding sale.
For sellers, these costs typically range from 5% to 10% of the home’s sale price, depending on the location, property type, and negotiated terms. That means on a $400,000 home, you could pay anywhere from $20,000 to $40,000 in total — so it’s essential to plan ahead.
💸 Common Closing Costs Sellers Pay
Here’s a breakdown of the most common costs you’ll encounter as a seller — and what each one covers:
1. Real Estate Commission (If Applicable)
The largest expense for most sellers is the real estate commission — typically 5% to 6% of the sale price — which is split between the listing agent and the buyer’s agent.
✅ Example: On a $400,000 sale, a 6% commission would total $24,000.
💡 FSBO Tip: If you’re selling without an agent, you can avoid the listing side of the commission — but you may still offer a commission (usually 2%–3%) to the buyer’s agent to attract more buyers.
2. Title Insurance for the Buyer
In many states, the seller is responsible for paying for the buyer’s owner’s title insurance policy, which protects the buyer from potential ownership disputes or claims after the sale.
✅ Cost: Typically 0.5% to 1% of the sale price, though this varies by location and provider.
💡 Pro Tip: Title insurance is often negotiable. In some regions, buyers pay for their own policies — so check what’s customary in your area.
3. Outstanding Property Taxes
You’re responsible for property taxes up to the day of closing. If you’ve already paid them for the year, the buyer will reimburse you for their share. If not, the amount owed will be deducted from your proceeds.
✅ Cost: Varies by location — often 0.5% to 2% of the sale price annually.
💡 Pro Tip: Double-check with your county assessor’s office to verify your property tax status before closing.
4. Mortgage Payoff and Prepayment Penalties
If you still have a mortgage, the remaining balance — plus any accrued interest — must be paid off at closing. Some lenders also charge a prepayment penalty if you pay off your loan early (though this is less common today).
✅ Cost: Varies based on loan balance and terms.
💡 Pro Tip: Request a mortgage payoff statement from your lender well before closing to know exactly how much you owe.
5. Attorney Fees (If Applicable)
Some states require an attorney to oversee the closing process. Even if it’s not mandatory, many sellers choose to hire one for peace of mind — especially in FSBO transactions.
✅ Cost: Typically $500 to $2,000 depending on location and complexity.
💡 Pro Tip: If you’re selling without an agent, investing in an attorney to review contracts and closing documents can help protect you from costly legal issues later.
6. Escrow and Settlement Fees
Escrow companies or closing attorneys charge a fee for managing the transaction, including holding funds, preparing documents, and facilitating the transfer of ownership.
✅ Cost: Usually $500 to $2,000, split between buyer and seller (though terms may vary by state).
7. Transfer Taxes and Recording Fees
Local or state governments may charge a transfer tax when property ownership changes hands. In some areas, these fees are split; in others, the seller pays the full amount.
✅ Cost: Typically 0.1% to 2% of the sale price, depending on your location.
💡 Pro Tip: Transfer taxes and recording fees are often overlooked — but they can add up fast, especially in high-value markets.
8. Repairs or Credits Negotiated After Inspection
If the home inspection revealed issues, you may have agreed to cover repairs or offer the buyer a credit toward closing costs. These costs are paid at closing and deducted from your net proceeds.
✅ Cost: Varies widely — from a few hundred dollars for minor fixes to thousands for major repairs.
💡 Pro Tip: Consider addressing major issues before listing your home to avoid costly last-minute negotiations.
9. Home Warranty (Optional)
Some sellers offer a home warranty as an incentive to buyers, covering major systems and appliances for the first year of ownership.
✅ Cost: Typically $400 to $700.
💡 Pro Tip: While optional, offering a warranty can make your home more appealing — especially to first-time buyers.
📊 Estimated Seller Closing Cost Breakdown (Example)
Here’s how typical closing costs might look on a $400,000 home sale:
| Expense | Estimated Cost |
|---|---|
| Agent Commissions (6%) | $24,000 |
| Title Insurance | $2,000 |
| Property Taxes (prorated) | $2,500 |
| Mortgage Payoff (balance) | $150,000 |
| Attorney Fees | $1,000 |
| Escrow/Settlement Fees | $1,200 |
| Transfer Taxes | $2,000 |
| Repairs/Credits | $3,000 |
| Home Warranty (optional) | $500 |
| Estimated Total Costs | ~$186,200 |
| Estimated Net Proceeds | ~$213,800 |
💡 Remember: This is just an example. Your actual costs will vary based on your location, loan balance, and negotiated terms.
🧭 Tips for Reducing Closing Costs
While some costs are fixed, others can be negotiated or minimized with the right strategy. Here’s how:
✅ 1. Shop around for services. Title companies, escrow agents, and attorneys often vary in price. Compare quotes before choosing.
✅ 2. Negotiate commissions. If you’re working with an agent, you may be able to negotiate a lower commission rate — especially in a strong seller’s market.
✅ 3. Offer fewer buyer concessions. If market demand is strong, you may not need to offer as many incentives.
✅ 4. Pay attention to contract terms. Review offers carefully — sometimes a slightly lower purchase price with fewer seller-paid costs nets you more in the end.
🏁 Final Thoughts: Plan Ahead to Maximize Your Net Proceeds
Closing costs are an unavoidable part of selling a home — but they don’t have to be a surprise. By understanding what they include, how much they typically cost, and where you might save, you’ll be able to plan more effectively and walk into closing day with confidence.
Whether you’re selling your first home or your fifth, the key is preparation. Estimate your expenses early, track them carefully throughout the process, and don’t hesitate to ask questions along the way. With the right planning, you’ll know exactly what to expect — and you’ll be ready to celebrate when the sale is complete.
✅ Final Tip: Before signing the final closing documents, request a settlement statement (HUD-1 or Closing Disclosure) a few days in advance. Review it carefully to ensure all charges are correct — and that there are no unexpected fees.
