First-time Seller Tips: What Your Closing Costs Mean

First-time Seller Tips: What Your Closing Costs MeanIt’s important to understand closing costs from both sides to ensure there are no surprises during your home transaction. But as a home seller, just what do each of your closing fees mean? We break down the typical home seller fees for you below:

Real Estate Commission

The real estate commission is a percent of the sale price that serves as the agent’s fee for service. The amount of the commission is negotiated at the time of your listing, and varies depending on the level of service provided by your agent. This commission is then divided between your seller’s agent and the buyer’s agent in a process called cooperating or a co-op commission. In traditional home sales, sellers always pay the commission.

Deed of Trust

As the seller, you’re responsible for any recording fees to satisfy the deed of trust. When you transfer the property deed to the new homeowner, the documents must be recorded at your county’s Register of Deeds. In Buncombe County, the recording fee for deeds of trust is $56 for the first 15 pages and $4 for each additional page.

State Revenue Stamps

North Carolina charges an excise tax on home sales of $2.00 per $1,000 of the sales price. While this is typically paid by seller, the buyer must still negotiate this line item with you so it is written accordingly in the contract. You are then responsible for buying the tax stamp from the Register of Deeds in your county. A land transfer tax of 1% of the sales price is added on top of the excise tax. This is a state tax that is always the seller’s responsibility to pay at closing.

Attorney Fees

While buyers typically cover the attorney’s fee for closing, the seller covers other attorney fees leading up to the closing. Those can include the attorney fee for deed preparation. You are also responsible for any fees associated with your specific side of the transaction, including faxes, copies, and courier to pay off your mortgage.

Prorated Property Taxes

Unlike the calendar year, the tax year runs July 1–June 30. Unless you’re closing on exactly that that endpoint, your last installment of property taxes will be for only a portion of the time period. The purpose of proration is to fairly determine where your responsibility for the property taxes ends and where the home buyer’s begins. At closing, if you have not yet made a payment which is due, you are charged with the amount for your portion of the installment. If you last tax payment covered a time period beyond the close of escrow, you are credited for the proration.

Prorated Homeowners Association Fees

As with taxes, the period for your homeowners association (if you have one) may not line up exactly with your closing date. Prorating your HOA fees ensures that you do not overpay for services beyond your ownership of the property.

Home Warranty

Purchasing a home warranty for the homebuyer or transferring an existing home warranty is certainly not a requirement for your home sale, but it does offer valuable protection of your finances and offer incentive to the buyer. Particularly for older homes, not only does it provide an extra incentive for buyers who are concerned about potential costly repairs, but it is available for you in case a major appliance needs to be fixed while your home is on the market. Home warranties average $350–$500 for basic coverage.

Typical Buyer Fees

While you, the home seller, have your share of closing costs, the homebuyer has his or her own. Here are the typical closing fees covered by the homebuyer:

  • Home appraisal
  • Home inspection
  • Property survey (if desired)
  • Prorated property taxes
  • Prorated homeowners association fees
  • Fees associated with getting the home loan, including origination
  • Recording fees for deed and deed of trust
  • Attorney fee for closing
  • Title insurance

Beverly-Hanks is Committed to You

Your Beverly-Hanks associate works directly with you to make certain deadlines are met, documents are distributed, and all details are accounted for. Our proactive management and attention to detail will help make sure your transaction is efficient and seamless. Click here to learn more about selling your home with Beverly-Hanks & Associates.

 

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One Response to “First-time Seller Tips: What Your Closing Costs Mean”

  1. I never would have thought that attorney fees would be so much of the closing cost. There’s a lot of things that I wouldn’t have thought about when it comes to closing on a house, and I think that hiring an attorney would be a pretty smart idea. Knowing more is always a good thing. Thanks for sharing!

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