Selling a house involves various costs that sellers should be aware of to effectively plan their finances and expectations. Understanding these costs upfront helps sellers make informed decisions and avoid surprises during the transaction process. These costs are detailed in the Settlement Statement, which should be received by all parties 3 days prior to closing. To provide clarity beforehand, your agent should furnish you with an Estimated Seller’s Net Sheet once an agreed listing price is determined. It's important to note that while this is an estimate, actual costs may vary slightly due to various factors. Here are the typical costs involved in the sale of a house:
Mortgage Pay Off: Before the closing, you will sign a release for the Title Company or Attorney to get the amount that will be owed at the day of closing. This will allow the Closing Company to prepare the closing documents and they will issue a check out of your proceeds at the closing to pay off your outstanding mortgage.
Lines of credit or Equity lines: As with the mortgage pay off, you will have to authorize the closing company to get this information. If there is any amounts owed, they also will be paid off and any lines of credit closed.
Prepayment Penalty: Often, sellers think that all that is owed is the amount showing on their last statement. This is not always true. A prepayment penalty could be in your mortgage. You may also owe interest depending on the day of the month that you close.
Unpaid Taxes/Liens: This is why title work is important prior to closing to see if there are any liens or unpaid taxes on the title. These items will also have to be paid the day of closing. The closing company cuts these checks out of your proceeds and pays them on your behalf.
Special Assessments: Special assessments are things like water, sewer, road or other local government improvements that were assessed to the property. In most cases they must be paid off, in others, they can be assumed by the buyer. If they are to be paid off, again the closing company will pay these out of your proceeds.
Closing Costs – Sellers are responsible for certain closing costs associated with the transferring of ownership of the property. These fees include title insurance, attorney/title company fees, recording fees and any prorated taxes or homeowners association dues.
Commissions – The agents' commission for the sale of the property. This is usually between 5%-6%, split between the listing and selling agent.
