What are the closing costs for selling a home?

There are a number of closing costs you can expect to pay when selling a home. (iStock)

Mortgage closing costs are something you might associate with home buying, but you may also have to pay them when selling your home. These expenses typically come to between 6 and 10 percent of the home's sale price, according to Realtor.com, and they can be paid out of the profits you expect to realize from the sale. Total closing costs paid by the seller represent the various fees, taxes and other charges required to complete the sale.

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What is closing costs on a home — and how do they work?

Your share of mortgage closing costs is paid once you sign the closing paperwork and the home purchase price is finalized. The attorney pays closing costs on behalf of home buyers, who provide funds including the down payment and signs the closing paperwork. The purchase is recorded and then the proceeds of the sale (less what you owe toward closing) are handed over to you.

Why are my closing costs so high?

The total closing can vary from seller to seller. A closing costs calculator  —  or affordability calculator  — could be a helpful tool to determine your estimated closing costs.

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"Closing costs depend on a number of factors, including the home value and the requirements of your state and municipality," said Beatrice de Jong, consumer trends expert at Opendoor.

Real estate agent commissions

Real estate agents get a share of the proceeds of a home sale, with 6 percent being a standard amount. This is usually split 50/50 between your agent and the buyer's agent.

For example, if you're selling your home for $300,000, you'd need to earmark $18,000 of the profits to cover the agents' commission. De Jong said real estate agent commissions are negotiable but need to be worked out when the home is listed. Once you're under contract, it's too late to change the fee.

Title insurance

Title insurance is insurance for the lender. It protects the lender against any issues or disputes over the property's title that may arise after the sale is complete.

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Title insurance can cost around $1,000 for a lender policy, according to Realtor.com, though you may pay more or less, depending on where you live.

Closing attorney's fees

The attorney who processes the closing paperwork and records the sale also gets a share of the profits.

Attorneys can charge $500 to $1,500 for their services. The silver lining is that not all states require a closing attorney to complete a home purchase transaction, so this is one closing cost you may be able to avoid.

Transfer tax

Transfer tax is a fee you pay to transfer the deed to the home from yourself to the new owner.

Not all states have a transfer tax. Among those that do, the amount you'll pay can vary widely, with some states charging a flat rate and others tiering the fee based on the home's sale price.

Recording fees

The recording fee covers the cost of recording the sale with your local register of deeds office. Without recording, the sale can't officially be considered complete.

This is one of the smaller closing costs you may pay as a home seller, typically running a few hundred dollars at most.

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Credits paid toward the buyer's closing costs

In some instances, the homebuyer may ask you to pay some of their closing costs.

"Buyers may also negotiate with sellers for closing cost concessions, which means the seller will provide a credit to the buyers in lieu of doing repairs on a house," de Jong said.

The amount you can offer in buyer credit toward closing costs is based on their mortgage loan type. Your purchase contract should specify what, if anything, you're paying toward the buyer's closing costs.

Prorated property taxes and/or homeowner's association dues

If you live in a neighborhood with an HOA, you should expect to pay any prorated costs toward HOA fees at closing. The same goes for any unpaid property taxes owed on the home before the buyer becomes the new owner.

Other miscellaneous costs

There may be additional closing costs you'll need to pay to sell a home, such as liens against the property. For example, if you took out a home equity loan, you'd need to pay that off, along with the primary mortgage.

Again, here's what you may have to pay to finalize the sale of your home:

  • Real estate agent commissions 
  • Title insurance
  • Closing attorney's fees
  • Transfer tax
  • Recording fees
  • Credits paid toward the buyer's closing costs
  • Prorated property taxes and/or homeowner's association dues
  • Credits paid toward the buyer's closing costs
  • Prorated property taxes and/or homeowner's association dues
  • Other miscellaneous costs, such as a financial advisor, credit report fees, a title search fee, appraisal fee and more

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Read your purchase contract carefully

If you're a firsttime homebuyer, make sure the contract you have with the seller spells out exactly who pays what — from home inspections to pest inspections and beyond — toward closing costs. If you see a charge you don't understand, contact your agent to ask them what it's for.

It's also important to keep in mind that a seller closing fee can vary based on the laws in your county and state, which can affect how much money you'll pocket from the sale. Finally, note that seller closing costs are not tax-deductible, though you can use them to offset the cost basis of the home when reporting capital gains from the sale.