How Much Are Closing Costs for Sellers?

Seller closing costs are a combination of taxes, fees, prepayments and services that vary depending on your location. Closing costs can differ due to variations in local tax laws, lender costs, and title and settlement company fees. In some cities, you might pay thousands just to transfer the title of the home to the new owner, while in other areas it’s free. It’s important to understand your regional requirements, who usually pays closing costs in the transaction, and when they’re due.

Average closing costs for sellers have historically ranged from 8% to 10% of the home's sale price, including both agent commission and seller fees. With the typical home value in the U.S. at $362,000, that puts the closing costs in a range from $28,960 to $36,200. Of course, these costs vary depending on the tax rate where you live, your agent commission, and the value of your home. 

Seller closing costs are made up of several expenses. Here's a quick breakdown of potential costs and fees:

• Agent commission
• Transfer tax
• Title insurance
• Escrow and closing fees
• Prorated property taxes
• HOA fees
• Credits toward closing costs
• Attorney's fees

Real estate agent commission

The majority of your closing costs come from paying commission to real estate agents. Historically, agent commissions have been between 3% to 6% of a home’s sale price, but there is no set commission percentage. 

Commissions, and the types of services an agent offers, are negotiable. Have a conversation with your agent early on in the process about how much their commission is, what kind of services they provide, how the commission will be paid, and who will pay it. Some sellers may choose to offer to pay the agent’s buyer as a part or portion of the buyer’s agent commission. The agreed-upon amount should be documented in writing.

One possible avenue for negotiating commissions is if you’re also looking to buy a home, and plan to use the same agent you’re using to sell your home. In this scenario, you could negotiate the commissions based on the sale of your home and the purchase of a new one. The same could hold true if you can bring the agent new business by recommending other sellers or buyers.

Transfer tax

Also known as a government transfer tax or title fee, these are the taxes you'll pay when the title for the home passes from you to your buyer upon closing.

This tax is charged by the state you live in, and the cost varies a lot by state — one of the reasons it's so hard to find a simple, accurate estimate of closing costs. And not every state has this tax. To illustrate how widely this amount varies, let's take a look at the following 10 real estate markets.

Owner's title insurance

Title insurance protects the new owner from issues with your home's title — meaning, if there's someone else who can claim ownership over the property, either because of a dispute over the property or because of outstanding liens from contractors, creditors, or the government.

This one-time payment protects the future owner from the financial burden of sorting out title issues in court, whether they arise at closing or years down the road. It even covers the money they've put into a home if they end up having to release their interest in the property (a worst-case scenario).

In many markets, sellers pay for a title insurance policy for buyers. Costs usually range between 0% and 1%, typically around 0.5% of the home sales price, and come out of your net profits on the deal on closing.

One important thing to note: On closing day, you'll probably see two different title insurance line items on your closing documents. One is the owner's title insurance mentioned above, which sellers pay in most markets. The other is the lender's title insurance. It's a similar policy that protects the buyer's lender's interest in the property. That is typically paid by the buyer.

Settlement fees

Settlement, or escrow, fees cover the services of an independent third party who handles the money that’s being exchanged between the seller and the buyer. The escrow company also manages the closing of the transaction, which includes the signing and recording of the closing documents.

The amount varies significantly by state, from $200 to the seller, up to 0.5% of the purchase price split between the buyer and seller. This can also include extra line items related to documentation (drafting, notarization, recordation) and money movement (wire transfers).

Prorated property taxes

When you own a property, you pay property taxes. While the property tax rate can vary widely state to state, all 50 states have some form of property taxes.

Most states accept property tax payments twice a year, and you can either pay them directly or have them paid out of an escrow account associated with your mortgage. When you go to sell your house, you'll be responsible for prorated property taxes due up to the date of the sale, at which point the buyer will take over. Depending on your timing, you may have to pay money at closing to bring yourself up to date.

HOA fees

If you're living in a community that is subject to a homeowner's association (HOA), you likely pay monthly, quarterly, or yearly dues. Just like with property taxes, you'll have to make sure you've paid those dues all the way up to the close date, which can mean paying more at closing. Some HOAs also charge a transfer fee to transfer your property to the new owner. You can check this in your HOA’s rules and regulations. The average HOA fee was nearly $200 a month, according to the 2021 U.S. Census, but they can range anywhere between $100-$1,000 depending on where you live and how many amenities are offered.

Credit towards closing costs

If you're selling your home in a buyer’s market (where buyers have their pick of many listings), you may have sweetened the deal by offering your buyer a credit toward closing costs. This is also called a seller assist or seller concession.

The credit you offer here effectively lowers the amount of cash the buyer needs to pay to close on the house. If this is part of your deal, expect to see it as a line item on your closing.

Attorney fees

While in the majority of the country it is not required, some sellers choose to have an attorney help them with the transaction — especially if dealing with complex transactions, distressed properties, or real estate holdings that have been inherited. If you do hire a lawyer, they will often be paid at closing out of your selling proceeds. Their fees range significantly — anywhere from $150 to $350 per hour, or it could be a flat fee depending on what they do for you.

When are closing costs due?

Closing costs are due when the buyer’s funds are available for payment and disbursement, and the closing documents are all signed by all necessary parties. All of the items we’ve covered above will be deducted from your proceeds on the sale, so you won’t need to bring cash to your closing unless your property is underwater — that means you owe more on it than it's worth.

As of August 2024, the typical U.S. home spent between 69 and 86 days on the market, from listing to closing. The time a home spends on the market varies greatly depending on local market conditions, demand and seasonality. Time tends to be shorter in the spring and summer months when home buying demand is highest, and longer in fall and winter when demand falls off.

How to reduce closing costs

There are a few ways you can reduce the amount you’ll need to pay in closing costs when you sell your home, including:

Shopping for title and escrow/settlement companies: In most states, title and escrow companies set their own price structure, so it's worth looking around to make sure you're getting a good deal.

Requesting a title insurance reissue rate: If you've lived in the home you're selling for just a few years, you may qualify for a reduced rate on your owner's title insurance policy.

Negotiating agent commissions: Real estate commissions are and always have been negotiable. For more information on how commissions are determined and what services they typically cover, read Can You Negotiate Real Estate Commissions?

Selling FSBO: Some sellers opt to list on their own or use a limited-service broker to save on commissions costs, but know that this could mean trade-offs in overall sale price as well as time and labor costs. Read more about the benefits of using an agent to sell your home.

Other seller costs

In addition to closing costs, keep in mind that as a seller, you may end up paying for additional costs to sell your house, including:

Loan prepayment fee

Depending on the terms of the mortgage you'll be paying off, you'll want to watch out for a prepayment penalty. This one-time fee is paid at closing to your mortgage company.

Home improvements

Unless your home is picture-perfect to begin with, you'll likely spend some money getting your home ready for listing. Common tasks include painting, servicing major systems like the furnace and A/C, and landscaping. While not part of your actual closing process, it's an out-of-pocket expense you'll want to plan for.

Moving costs

Of course, right around closing, you'll also be moving. Make sure to set aside funds to cover your moving expenses, whether you're moving across town or across the country.

Home buying costs

Often, people sell their home because they're buying a new one. If you're buying another home soon, you're not out from under closing costs just yet. Buyers have their own set of closing costs when buying a new home, and while they can vary widely depending on loan type, location, lender, and individual circumstances, they typically range between 2% to 5% of the home's purchase price.