The closing costs of a realtor sold property and a private investor sale of property can vary greatly depending on various factors such as location, property value, and the terms of the sale.
In a realtor sold property, the typical closing costs can include the real estate agent’s commission (usually around 6% of the sales price), title insurance, escrow fees, property taxes, and other miscellaneous costs such as inspections and appraisals. These costs can add up to several thousand dollars, depending on the specifics of the sale.
What Are the Closing Costs for a Home Seller?
Selling a home involves a number of costs that must be paid at settlement, known as closing costs. These costs vary depending on various factors such as the real estate market, loan balance, property taxes, and other expenses. Understanding the different types of closing costs is important to be prepared and budget accordingly.
California Realtor Sale
Commission for Real Estate Agents
One of the largest closing costs for home sellers is the commission for the real estate agents involved in the sale. Commissions are negotiable and vary by market, but a typical commission is 6% of the sales price of the home, which is split between the listing agent and the buyer’s agent. For a $350,000 purchase price, the real estate agent’s commission would come to $21,000.
Loan Payoff Costs
Home sellers often aim to sell their home at a price that will pay off their mortgage and satisfy their lenders. However, the mortgage payoff balance may be higher than the remaining mortgage balance and the buyer’s purchase price due to lenders’ prorated interest. In some cases, lenders may require a prepayment penalty for paying off the mortgage loan before the end of the term. Home equity loans or lines of credit must also be paid in full at settlement. It is important to discuss these costs with the lender before closing.
Transfer Taxes or Recording Fees
Transfer taxes, recording fees, and property taxes are also part of the closing costs for sellers.
Transfer taxes are imposed by the state or local government to transfer the title from the seller to
the buyer, and property taxes must be up to date before the keys are handed over.
Title Insurance Fees
Title insurance fees are another expense to keep in mind when selling real estate. As part of the
closing costs, sellers typically pay the buyer’s title insurance premium to protect them in case of
any problems with the title.
Attorney Fees
If the seller has their own attorney represent them at settlement, they may have to pay attorney
fees. The tradition varies by market, and in some areas, both buyers and sellers have their own
attorneys, while in others, a single settlement attorney is used. In some areas, the buyer pays the
attorney fees, while in others, the seller does.
Additional Closing Costs In California
Additional closing costs for home sellers include liens or judgments against the property, unpaid homeowners association dues, prorated property taxes, escrow fees, and homeowners association
dues up to the settlement date. Depending on the real estate contract, closing costs may also include a termite inspection, home warranty premium for buyers, and repair bills or credits for items found during a home inspection. Additionally, sellers should estimate costs associated with preparing the home for sale, such as cosmetic repairs or improvements, which may result in a higher sales price but still need to be included in the calculations.
California Private Sale
In a private investor sale of property, the closing costs can be much lower as there are no real estate agent commissions involved. However, private investors may charge a fee for their services or ask for a portion of the profits from the sale. Additionally, the buyer will still be responsible for covering the costs of title insurance, escrow fees, property taxes, and any other necessary inspections or appraisals.
Overall, a private investor sale of property can offer a more cost-effective option compared to a realtor sold property, but it is important to consider the potential drawbacks and do proper research on the buyer before entering into a sale agreement.
