When trying to complete a home sale, the seller can expect to cover closing costs. Such closing costs include all sorts of costs, from real estate agent commissions to even transfer taxes. The problem is that these closing costs can be pretty expensive, amounting to roughly 6% to 10% of the sale price. For any seller looking to make a profit, this amount lost to closing costs can be a significant loss indeed. Fortunately, the documents that outline closing costs will be given to the seller and buyer, allowing the numbers to be checked to ensure any error is fixed.
Are you trying to sell your home? If so, it is vital to understand what closing costs you need to cover and how you can cut down on the fees:
You will have to pay a real estate agent commission fee any time you are selling a home. This is a fee that any buyer needs to pay and is typically calculated as a percentage of the home sale price. For example, a 2% commission fee on a $300,000 home means that the seller will end up paying $6,000 to the real estate agent. Sellers can try to negotiate down this fee. However, they will most likely not be able to get it eliminated.
2. Transfer Taxes
Transfer taxes are one of the fees that can vary significantly from state to state and even from county to county. These fees are calculated as a percentage of the home sale price, so they are quite significant. For example, in California, transfer taxes are 1% of the home price, which amounts to $5,000 on a home that costs $500,000. While the exact tax percentage varies by state, the fees are typically pretty similar.
3. Closing Costs
Closing costs are fees that the seller needs to pay to the lender and title company and run anywhere from $1,000 to $5,000. These costs may include the underwriting fee, documentary stamps, and any other services that the title company may charge. These costs can be negotiated down, but be sure to check them before finalizing the sale.
4. Seller Credits
While seller credits are not technically closing costs, they are usually paid for by the seller. These credits are given to the buyer as an incentive to help them cover their closing costs. Some examples of seller credits are paying for some of the buyer’s moving expenses or even giving away some furniture.
Closing costs do not need to be extremely expensive, but they can be. You need to do some research to know how much closing costs can be and find out what you can do to lower the fees. Apart from being aware of where you can negotiate for lower fees, one of the best ways to reduce your overall closing cost is to speak with the real estate agents. They will tell you precisely what you need to pay and let you know what you can do to negotiate these costs down to ensure that at the end of the day, you maximize your profits from your home sale.
Sell for Cash AZ is an Arizona company offering to purchase homes in any condition regardless of the seller’s situation. If you need to sell your house asap in Arizona, reach out to us today!