As a seller, closing costs are a term you should not only be familiar with, but now about in detail. Many first-time sellers overlook these costs in their first few deals, and it causes problems later on in the business transaction.
Now, you are probably wondering what exactly closing costs are. Closing costs are a set of fees that both the buyer and seller must pay at the ending of a real estate transaction. One should not confuse these costs with the agent’s commission you must play if you employed an agent. These costs are usually about one to three percent of the selling cost.
Another thing you may be wondering is what ‘closing a house’ means. Closing a house is the process in which documents and money is transferred to put the property in the ownership of the buyer.
For a seller, the closing costs include the following:
1. Fees for buyer’s title insurance policy.
2. Mortgage payoff and prepayment penalty (this cost depends on whether it is applicable or not)
3. Outstanding amounts owed on the property
4. Seller’s attorney fees (these costs also depend on whether they are applicable or not)
5. Transfer taxes and recording fees
In some situations, a buyer may even ask for you to pay for their closing costs, but do not brush this off, as it may work in your favor. Paying for a buyer closing costs is always reflected in your net proceedings, which is the amount of money you walk away with after these costs are paid.
Unless you have low equity, in which case you will have to pay for these costs yourself, closing costs will be taken out of the proceeds you make on the residence.
There is a lot of controversy when it comes to whether you, as a seller should offer to pay the closing costs for your buyer. Mainly, experienced sellers in competitive markets do this to sweeten the deal, and attract future residents. So, the choice is up to you, but if you want to sell the property at a faster rate, this is one thing that is worth considering.
As you can see, closing costs depend on a variety of things, loans, mortgages, fees. All these variables higher or lower the costs. So, if you want a clear idea of how much the closing costs are, before you make any final decisions, there are many online websites to help you calculate these numbers. Your agent, if you have hired one, will also be helpful in telling you how much you have to pay exactly. After all, it is best and smartest to have a clear idea on exactly how much the closing costs are, before you decide anything else.
Like most processes that come with selling a house, at first it seems daunting. However, there is no avoiding these costs, so it is best to be well informed and have done your research beforehand to prevent as many problems as you can. I hope this article helped you do just that!
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