Selling your home can be a monumental undertaking. While you may be relieved to earn a profit from your property, seller closing costs can quickly cut into your bottom line.
Thankfully, there are a few ways you can keep these fees as low as possible. This way, you can walk away with more money in your pocket, and fewer regrets.
Ready to learn more? Today, we’re sharing a few steps that can help reduce closing costs for sellers.
What Types of Closing Costs Do Sellers Pay?
While the home buyer is the one paying for your home, both buyers and sellers are required to pay closing costs on the transaction. While the average closing costs for sellers are substantially lower than that of buyers, there are still charges to understand.
In general, these are expenses related to the administrative actions required to complete the sale. This may include charges to cover:
- Taxes on the sale
- Real estate agent commissions
- Home seller attorney fees
- Escrow fees
- Title transfer fees
- Closing fees charged by the facility that hosts the closing (usually a title insurance company or law office)
There isn’t a universal percentage to memorize, and the exact dollar amount will vary by transaction, as well as geographic location. However, most sellers can expect to pay between 1% to 3% of their home’s sale price in closing costs.
This number is smaller than the percentage that buyers will pay, which is typically between 3% and 4%. In some cases, however, seller closing costs can skyrocket to as high as 10%! While losing that much money might sound detrimental, remember that in most cases, the expenses are simply taken out of the profit you’ll earn from the sale of your home.
A few days before the official closing occurs, both buyers and sellers will receive what’s known as a closing disclosure. This is a document that clearly lays out every detail of the sale, including all costs involved. If there are any errors in the information, you will have the opportunity to correct them at that time.
Ways to Increase Your Sale Profit
As the seller, you naturally want to walk away from a real estate closing with as much money as possible. While there’s no way to completely dodge closing costs altogether, there are steps you can take to lower the amount. Let’s take a look at a few of your options.
Negotiate Where You Can
Start by negotiating the fees that aren’t iron-clad by nature. This might include attorney fees, real estate agent commission rates, messenger fees, and similar charges.
While these conversations can be a little uncomfortable to initiate, there may be a little wiggle room. It’s always worth a try, even if the answer isn’t in your favor. Some agents could be willing to take a lower commission or offer their services at a discount.
Consider the FSBO Route
Have you considered selling your home on your own? When you list your property as For Sale By Owner (FSBO), you can eliminate the fees associated with hiring a real estate agent to oversee the transaction.
In that case, you’ll essentially act as your own agent. While the process can be a little overwhelming and there are lots of elements to consider, many buyers think it’s worth it to keep that commission in their pocket. Still, consider all of the activities that you would be in charge of, such as:
- Staging your home
- Scheduling showings and open houses
- Advertising your home
- Negotiating the sale of your home
- Completing sale-related paperwork
If those tasks don’t sound too daunting, then this can be a viable and cost-effective route.
Wondering who pays closing costs when selling a house by owner? The answer is that you’ll still split those charges much as you would a traditional transaction. The only money you’re truly saving is what you’d spend on a real estate agent.
Talk to the Buyer
In some cases, the buyer will be willing to pay closing costs under certain conditions. For instance, you may agree to leave a piece of furniture in the home free of charge. Or, you might throw in the appliances that come with the home.
Another way to retain as much money as possible? You could raise the sale price of your home and then advertise your willingness to pay a buyer’s closing fees. This can be an attractive offer that works for both parties as long as your agent helps you price the property correctly.
Sell to a Cash Buyer
When you sell your home to a cash buyer, you can avoid all of the costs associated with a typical closing. These buyers will simply offer you money for your property, with no questions asked or repairs needed.
In addition, there are no commissions to worry about or paperwork to complete. Cash buyers will usually pay for all normal closing costs and can expedite the process in as little as one week. If you’re wondering, “Can I sell my home in 7 days?”, then the answer is yes!
Use an MLS Service
Another way to avoid paying a real estate agent commission without listing your home as FSBO? You could also invest in a flat-fee Multiple Listing Service) MLS platform.
In short, this platform allows you to get your home in front of interested buyers, as well as the agents who represent them. Recent research shows that there are more than 800 private MLS services, paid for by real estate professionals to help their clients buy and sell property.
Sellers can pay a fee to list their homes on an MLS. While this fee can be upward of a few thousand dollars, it is often less than an agent’s commission. However, all of the administrative aspects of the sale will still fall on your shoulders.
Minimize Closing Costs For Sellers
Selling your home is a huge step. You want to earn as much money off the transaction as you can, especially if you plan to turn right around and invest those earnings into a new property.
When you know the best ways to lower closing costs for sellers, you can take proactive steps to keep your profit high. Often, this means communicating and collaborating with the other parties involved in the sale, including buyers, real estate agents, and attorneys.
Looking for more real estate advice you can trust? We have plenty of tips on our blog, so check back often for more informative guides!