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Sellers Should Budget for These Closing Costs

by The Urban Specialists 07/04/2021


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In real estate, closing cost refers to the total amount of money due at time of purchase. This cost is usually equal to a small percentage of the total purchase price but can vary based on state, county and other factors. Sellers handle a portion of the closing costs which can sometimes be even higher than what the buyer pays. What exactly do sellers have to pay for at closing? Here are some of the most common costs to plan for:

Agent Commission

Real estate agents on both the buyer and seller side earn a commission in a home sale. The amount can depend on the market but it’s always split between the agents on either side of the transaction. In most cases, the seller is the one paying. This means that if you’re selling your home you should expect to pay out around 5% of the purchase price at closing unless you negotiate with the agents for lower commission rates. This is definitely the largest seller expense at closing.

Mortgage or Loan Payoff

In order to sell your home you need to pay off any remaining balance on your mortgage. Your budget should include funds to cover the remaining balance and any prorated interest. Some lenders also charge a fee for early payoff or pre-payment, so it’s important to investigate that ahead of time to avoid unpleasant surprises. Go over the terms of your loan carefully so you’re prepared.

Taxes

There are a couple of tax expenses sellers should prepare for, including property tax. If you have not paid your property taxes in advance, you’ll need to budget for the prorated amount through the date of the sale. Another tax expense for sellers is title transfer tax, in which your local or state government will charge a fee for switching the title over to the buyer. You should also know about capital gains tax if you’re making a significant profit on the sale. Typically, this is only something investors need to worry about, but homeowners have the same rules. Consult a financial advisor or tax attorney to confirm your situation.

Utilities

Don’t forget that you’ll need to pay off your utility bills on the home when you sell it. Even if you haven’t been living in it, you’ve probably had the electricity, water and other utilities active throughout the selling process. This cost should be simple to budget for, however. You can use your monthly bills as a guide to estimate how much you’ll owe for utilities at time of closing. Check to see if there are any additional fees related to equipment or early termination of contracts so you can factor them into your budget as well.

There are lots of other miscellaneous expenses that make up closing costs for sellers. The above are the most common, but you might also have costs specific to your situation. Planning for and identifying all the potential costs before closing day will help make your home sale as smooth as possible for everyone involved.

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The Urban Specialists

CITY RESOURCES The great thing about urban centers is just how much stuff you find around you. Your favorite restaurants, cultural activities and museums are within walking distance of your front door. It's convenient and adds to how much you get out of your place. For more info on New Haven, check out these links: Info New Haven Visit New Haven We are passionate about the environment. We are eager to help you to add value to your current home, save money on utilities, make your lives more energy efficient and eco-friendly, and generally live a "greener" lifestyle, all without sacrifice. For more info on green living in New Haven, visit these sites: CT DEEP Neighborhood Housing Services of New Haven USGBC's Green Home Guide We care about historic properties and their communities and wish to encourage preservation of our community's architectural and cultural history. For more info on New Haven preservation, check out these links: CT Trust for Historic Preservation New Haven Preservation Trust Historic Homes Downtown Areas Neighborhoods Green Homes Bethany Branford Guilford Hamden New Haven North Haven Orange West Haven Woodbridge Olivia C. Martson Olivia Martson is a long time resident of New Haven. She lives and works in downtown New Haven and is thoroughly familiar with the pros and cons of urban living. From 1992-1997, she served on the New Haven Board of Alderman as the elected representative for Ward 2, the downtown neighborhood immediately west of Yale University. Fore more : Biography - http://media.mlspropertyfinder.com/418613/preview.jpg