Closing costs associated with selling a home include various fees and expenses that are incurred during the transfer of ownership from the seller to the buyer. While the specific costs can vary depending on factors such as location and individual circumstances, here are the common costs:
- Title Fees: These fees are related to the title search and insurance process. They ensure that the property’s title is clear and free of any liens or encumbrances. Title fees can add up.
- Mortgage Payoff: If you still have an outstanding mortgage on the property, you’ll need to pay off the remaining balance upon selling the home. The mortgage payoff amount includes the remaining principal balance, any interest accrued until the closing date, and any prepayment penalties if applicable. Contact your mortgage lender to obtain an exact payoff amount.
- Liens or second mortgages (for example, a home equity line) on your property: These amounts are also required to be paid off prior to the property transferring to the new owners.
- Property Taxes: If you have any outstanding property taxes, they will need to be paid off before the property sale can be completed. The amount owed will depend on the local tax rates and the time since the last tax payment. Keep in mind, Cuyahoga County bills residents for 6 months in arrears. What does this mean? In July 2023, you will be paying your taxes for the 2nd half of 2022. Ugh. Unfortunately, the current year’s taxes through closing date will need to be paid before the property can transfer.
- Broker Fees: If you worked with a real estate agent to sell your home, their commission fee is typically a percentage of the final sale price. In NE Ohio, the fee is usually about 6%. Higher priced homes (300k+) may be able to secure a sliding percentage where the amount over 300k is calculated at a lower percentage. But be careful of discount brokers who claim to give you all the same benefits as a full service real estate agent. It’s simply not true.
In addition to these specific costs, there may be other closing costs associated with selling a home, such as:
- Attorney fees: In some cases, sellers may choose to hire an attorney to handle the legal aspects of the sale. Their fees can vary.
- Recording fees: These fees cover the cost of officially recording the deed and other relevant documents with the appropriate government office. Someone has to drive down to the County recording office to physically file the deed.
- Transfer taxes: Some states or municipalities may impose transfer taxes based on the property’s sale price. These taxes are paid by the seller upon transfer of ownership.
To avoid any surprises when you go to sell your home, reach out to Lisa Timko to request a “seller net sheet” which will itemize all of your costs!