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We are currently in the process of selling our home and it just went under contract—yay! We want to know what to expect financially from this point forward. What are common closing expenses for sellers?


Cheryl, Palisade


Oh my gosh, this is such a great question and one that I get ALL the time! As a seller you have the privilege of paying the sales commission you agreed to with your listing agent, assuming your home is listed with a Realtor. The other costs associated with selling your home (outside of the real estate commission) that are the seller’s responsibility are varied, but you can almost always calculate an additional 1% if your sales price is UNDER $300,000 and about .7% if your home is over $300,000. If you calculate it that way you will, almost always, come up with a slight overestimate of your closing costs.

The most common cost that is overlooked is your property tax. What most people don’t fully realize, as I did not prior to becoming a real estate agent, is that our property taxes are paid in arrears. It’s probably something most folks just don’t think much about and it often is a bit of a surprise. How it works is, the title company will pro-rate the current taxes from January 1 to the day of closing and you will have that amount debited on your settlement sheet. The two largest debits you will see (outside of real estate commissions and your mortgage payoff) will be the taxes and the title insurance policy. Title insurance simply indemnifies that the title to the property will be passed from you to the new owner in good standing and free of any liens. For a $250,000 home you can expect this expense to be in the $900-$1000 range, these costs are on a sliding scale based on purchase price.

The most discussed fee on the seller’s settlement statement is often the charge for water & sewer. The bills for water and sewer, if left unpaid, can be held as a lien against the property and thus MUST be settled at the time of close to ensure the passing of a clean title (as discussed above). In order to ensure that the amount that is owed is covered, the title companies always hold out an amount significantly over (generally around $200) your typical water and sewer bill. This ensures there is enough to pay it off and they will refund the difference back to you shortly after close. This one always creates a fair amount of discussion about how you never have had a bill that high, but believe me they will refund you the difference in short order. Always remember that your other services like gas, electric, telephone, television, etc. are your responsibility and you should call 24–48 hours prior to close and let them know you will be moving and the service will be transferred to a new owner on the date of close.

One last tip. Your mortgage statement always provides a payoff for you to reference, however the day it is printed you start accruing interest so your payoff is always higher than what is printed on your statement. I always tell our sellers to just add one extra payment to the amount on the settlement statement and that will provide a safe payoff amount. In my experience when closing day comes people are happy they overestimated and get a little money back, rather than under estimate and have to go digging for that little extra! I hope this help and by following these guidelines you should have a safe estimate of your closing costs.  Congratulations on getting your home under contract and best of luck on your new journey!

Dave Kimbrough
The Kimbrough Team


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