A Definitive Guide To Closing Costs
If you’re thinking about selling your home, you’ve come to the right place. At Felix Homes, we’ve created a ‘Home Selling Tips’ series which will cover everything you need to know before you put it on the market. The goal of this series is to let you in on trade secrets with the goal of empowering you, the home seller so that you can get the highest price in the shortest amount of time.
One of the most common questions we get at Felix Homes is how much are closing costs and who pays for them? Before we dive into who pays what, it’s important to go over what closing costs are. Closing costs are simply the upfront fees that are associated with closing a real estate transaction.
What Closing Costs Do Sellers Typically Pay
Let’s say you just sold your house for $500,000. We all know that you won’t necessarily walk away with that amount and in most cases, nothing even close to it. Here is a list of closing fees that a seller typically pays:
1. State Property Taxes (Prorated): The seller is responsible for any state property taxes that were accumulated between their last payment and the closing day.
2. HOA Fees and Transfer Fees (Prorated): The seller is responsible for any HOA Fees that were accumulated up to the closing day. Additionally, depending on the details of the purchase contract and the HOA, the seller may also need to pay a fee to their HOA to transfer the property to the buyer.
3. Title Fees: The seller typically pays a title company to do a comprehensive title search and transfer the title over to the buyer. Additionally, Sellers will also handle the new owner’s title insurance, which protects them in case there are any issues with leans against the property. Many title companies also handle the escrow account for the transaction, which they’ll include in their fee to the seller.
4. Realtors’ commission: This is where you’ll be able to save mega-$$$ with Felix Homes. The home seller is responsible for any fees charged by the real estate agents involved in the home sale. This includes both the listing agent and the buyer’s agent. In most cases, this is usually around 6% of the sales price (3% to the listing agent and 3% to the buyer’s agent) which for a $500,000 home is $30,000! At Felix Homes, we’ve done away with the 6% commission. Instead, we charge a 1% commission on the listing side and we still encourage our clients to offer a buyer’s agent a 3% commission so they are incentivized to bring their clients to your listing. Our 1% model saves the average homeowner over $15,000 in Realtor commissions!
5. Real Estate Transfer Tax: This varies from state to state but in Tennessee, the current deed transfer tax is $0.37 per every $100 of the sales price. So for a $500,000 home, the transfer tax would cost the seller $1,850.
As real estate experts, we know the process of selling your home can be stressful, especially if you don’t know exactly how much it can cost. In addition, at Felix Homes, we are doing our part to decrease the cost of selling a home by lowering the fees we charge compared to other agents all while providing a better home-selling experience. If you’re interested in other home selling tips, head over to our blog and if you’re interested in selling your home, feel free to get a free home value report on our website.