When you’re trying to sell a home, what exactly ARE closing costs?
Closing costs can reach 8-10% of the sale of a home. So estimated closing costs on a $250,000 home could be $20,000 to $25,000…
That’s a LOT of money!
But where is that money going? Does the seller or buyer pay for closing costs? And are there any ways to reduce how much you pay in closing costs?
Unfortunately, in a typical real estate transaction, the seller will pay more closing costs than the buyer. Potential items included in seller closing costs are:
- Agent commission (paid by seller)
- Transfer tax (paid by seller)
- Title insurance (paid by seller)
- Escrow and closing fees (split between buyer and seller)
- Prorated property taxes (paid by seller up to close date)
- HOA fees (paid by seller up to close date)
- Attorney’s fees (paid by seller)
If the buyer demands updates or repairs before signing, or if the inspections find hidden damage, the seller might also be required to pay for repairs.
The good news is that these closing costs will usually just be deducted from the profit you make on your home… but that’s also BAD news. Because after all is said and done, you’ll make LESS money on the sale.
If you’re planning to buy a new home with the profits from your old one, paying all those closing costs means you will have less money to use as a down payment.
One way to reduce closing costs is to negotiate with your real estate agent on their commission. If they refuse to negotiate, it could be a red flag and you might consider finding a new agent.
Another option is to skip the traditional method altogether and sell your Southeast Michigan house to a professional homebuyer. At Mitten Made Properties, we pay ALL closing costs on homes we buy. We can pay cash for your Metro Detroit home, as-is – no repairs required – and close in as little as two weeks. Give us a call at (248) 883-3340 to learn more!