What Are Closing Costs in a House Sale?
Closing costs are additional expenses that buyers and sellers pay to complete a real estate transaction. Costs may include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed recording fees, and credit report charges. They can be associated with the mortgage company, realtor, third-parties, or local and state agencies.
When you sell a house, part of the agreement involves who will pay the closing costs and the amount of each cost. For example, to sell your house in Kansas City, Missouri, you may agree to pay the first six months of homeowners insurance after the buyer moves in. Or, you may agree to pay realtor commissions for both the buyer’s and the seller’s realtor.
Below we provide a brief overview of common seller closing costs and what you can expect to pay at closing. We also provide a solution for how to avoid closing costs.
Title Search
Average cost: $300 to $600
Ensures that you are the rightful owner of the property and no outstanding claims or judgments against the property.
Title Insurance
Average cost $1,000
The lender and buyer obtain title insurance, which protects them if a title problem arises after closing.
Home Inspection
Average cost $300 to $500
Ensures there are no major issues with the home’s structure or systems.
Appraisal
Average cost $450 to $650
The report verifies whether the property is worth the asking price or what the seller is borrowing from the lender.
Survey
Average cost $350 to $500
For loans, many states require a survey, which shows where the property’s legal boundaries are.
Credit Report
Average cost $20 to $50 per report
The lender will run a credit report on the buyer with one of the three major credit reporting bureaus.
Loan Payoff Costs
0.5 percent – 1.5 percent of the sale price
Loan payoff costs include application and assumption fees, prepaid interest, and loan origination fees.
Mortgage Payoff or Prepayment Penalty
Amount varies by the loan agreement
If you owe anything on the property’s mortgage, you will pay this amount at closing. Some lenders charge a penalty for paying your loan off before the end of the mortgage term. Penalties can be a percentage of your remaining balance or a sliding scale fee based on the age of your loan.
Outstanding Property Amounts Owed
Amount varies by balances
Outstanding amounts may include property taxes, utility bills, homeowners insurance, and HOA dues. Amounts are be prorated to the closing date.
Transfer Taxes
Amount based on property value and local regulations
Depending on your local and state laws, you’ll likely be charged taxes on the sale transaction. These are calculated based on the property’s value and local laws. Your state and county taxing authority’s website will have information about your local tax rates. You can also ask your real estate agent.
Recording fees
Amounts vary based on county
Your escrow agent, title agent, or attorney will file the deed transferring the property to the buyer with the appropriate county office. Each county sets its recording fee.
Settlement or Attorney Fee
Average cost of attorney fee $150 to $500
Average cost of settlement fee $2 per $1,000 in selling price
- A settlement fee is paid to the escrow or title agent who handles your closing. If an attorney is handling the closing, you will pay attorney fees instead.
How to Avoid Closing Costs When Selling a House
As the seller in a transaction, you are likely to pay the bulk of your and the buyers’ closing costs. When realtors negotiate the conditions of the sale, they often offer to pay a closing cost to sweeten the deal. This is one of the downsides of hiring a realtor and making a traditional sale. However, there is a way to avoid closing costs.
You can sell your house as-is for cash to a company that buys houses in Kansas City, Missouri. A professional house buyer can assess the value of your house, make a fast cash offer, and close the sale within a few days. The buyer agrees to pay most or all of closing costs, saving you thousands of dollars in selling expenses.
Contact Kansas City Cash Closings to Sell Your House Fast
You don’t have to wait to unload your property. If you need to sell your house fast in Kansas City, Missouri, contact Kansas City Cash Closings. We can look at your property, make an offer, and close in as little as seven days. Call 816-659-2259 to get a fair cash offer.