3 Sellers Closing Costs You Should Know About

A document labeled “closing costs” with some house keys and a notepad.

Selling a house can be hectic and stressful. A real estate transaction requires you to deal with real estate agents, prospective buyers, and other parties. There are a lot of documents to gather and various steps, such as repairing damage and staging the home for listing, to take care of. 

One of the surprises that many homeowners have when selling a home is finding out that the total costs of selling a house are higher than expected. 

Home sellers need to cover various costs before completing the home sale. Here is all you need to know about closing costs when selling a house. 

Sellers’ Closing Costs

A home closing is when the seller transfers the deed to the buyer, and the home buyer transfers the money to the seller. An escrow service usually facilitates the closing process by holding onto the money and ensuring it is secure while also ensuring the seller has the proper documents. 

Many home sellers will be familiar with the agent commission that they have to pay when selling through a real estate professional. This seller’s agent fee is usually between 4-8% of the total sale. The buyer’s agent might also charge a fee, and the seller often has to cover it. However, the real estate agent commission is just one fee of many. 

You can usually avoid paying the real estate agent by selling the home yourself to potential buyers. Listing your home as “For Sale by Owner,” or FSBO, means you will cut out the real estate agent, at least on your end. 

If a buyer’s agent finds your listing on Zillow and facilitates the deal, though, you may still be on the hook for their commission, which is usually around 2-3%. 

While FSBO sellers can’t always avoid the buyer’s agent commission fee, another option is selling your home to cash buyers directly. As opposed to the FSBO route, you won’t have to pay any real estate commission, allowing you to get your full asking price. 

In addition, while a For Sale by Owner home can spend a lot of time on the market, selling to a cash buyer is a lot quicker and doesn’t involve a lot of work or hassle. If you want to sell a house fast in Houston, deal with cash buyers only. 

In addition, you won’t have to pay someone for an MLS listing. Many homeowners selling for sale by owner pay a brokerage or agent a one-time fee to get their home on the Multiple Listing Service database

Nevertheless, there are still other fees you will have to pay. Some fees are simply unavoidable in most cases. 

Types of Sellers’ Closing Costs

The seller doesn’t have to pay all closing costs. You can usually negotiate with the buyer to get them to cover some of those costs. However, if you want to make the sale more attractive to potential buyers, it’s a good idea to offer to cover the closing costs yourself. That’s especially true in a competitive real estate market. 

We’ve already covered the first type of closing cost: the real estate agent commission. For FSBO sellers, this category would include other listing-related fees, such as listing on premium sites or paying an agent for an MLS listing. 

However, there are closing costs that you must pay before even listing your home. If there is structural damage, you must repair it. You should take care of any significant damage before selling your home, or it will come up in the inspection report, and it will be hard to find a lender who will approve the buyer’s mortgage. 

You might also fix other types of minor damages. Furthermore, you can invest in staging your home and improving its curb appeal. You might repaint it, pay for some landscaping services, and do a deep clean to make it more attractive to potential buyers. 

Another type of closing cost goes to the government. You have to pay a transfer tax when selling the house. If you are selling an investment property or a house that is not your primary residence, you may also have to pay capital gains on the sale. Either long-term or short-term capital gains may apply. 

Other fees go towards protecting the buyer’s interests and showing that you are committed to a fair deal. An example would be a title search, which demonstrates that you have full legal rights to the house and that there are no liens on the house. If you owe money to a lender, and they have a lien on your home, they can repossess it. 

Therefore, you would have to pay off any loans with liens on the property, which is yet another closing cost to consider. 

In addition to the actual title search, which reveals such liens, home sellers typically take out a title insurance policy. This insurance, which can cost a few thousand dollars, protects the buyer from any future liens that may arise, such as a lender who appears and claims to have a legal claim to the property. 

Of course, you also have to protect your own interests, which is why you should hire a lawyer to facilitate the deal. Your lawyer will look over the contract and examine it for flaws. They will also advise you on how to make sure there are no legal problems with the sale. Attorney fees can vary. 

You might also have an escrow company take care of the closing process. An escrow company protects both you and the buyer and ensures a smooth handover of documents and funds. Escrow companies may charge a commission or a flat fee. 

A homeowner calculates closing costs on a house sale in Houston, TX.

Does a Seller Need To Pay Closing Costs?

Most of the time, sellers need to pay closing costs. It’s possible to negotiate with the buyer and have them cover some closing costs, such as the title search or title insurance. However, getting a buyer to cover all closing costs is pretty uncommon. 

There’s a simple reason for that. As a seller, you can use the proceeds from the sale to pay many closing costs, including the real estate agent commission, escrow fees, and even loan payoff fees, if you can negotiate such a deal with your lender. 

However, the buyer typically has to pay closing costs out of pocket. While they might be okay with paying some closing costs out of pocket in exchange for a lower sale price, most buyers will see it as a turnoff if you ask them to cover all closing costs. 

Nevertheless, there is a way to get out of paying closing costs, and that’s by selling to a cash buyer. Cash buyers purchase homes as-is, so you won’t have to pay any repair fees. 

Furthermore, you won’t have to pay for a professional appraisal or home inspection. Cash-buying companies typically give you a fair quote themselves. 

Not only that, but cash home buyers in Texas are often willing to take on the burden of paying other closing costs in exchange for a lower sale price. They don’t mind paying out of pocket, as they are in the business of buying and selling homes for cash all the time. In other words, they have the funds on hand to cover those costs. 

For example, if there is a lien on your home, a cash buyer might be willing to pay off the debt. Perhaps you owe $50,000, and you want to sell the house for $200,000. A cash buyer may purchase it for $150,000 and pay off your $50k debt at the same time. 

You may still have to pay property taxes, though. That’s one closing cost that isn’t always possible to get out of. The IRS will always want a share of your profits, but again, there are exemptions to certain property taxes, like capital gains taxes. 

At the end of the day, selling to a cash buyer is one of the cheapest ways to sell a house

3 Closing Costs You Need To Know About

Here are three closing costs that sellers typically have to pay when selling a house. 

The first is the home appraisal and inspection fees. A home appraiser will evaluate your home and determine its value based on factors such as its square footage and the number of bedrooms it has. An appraiser will also look at external factors such as the real estate market, the location, and recent comparable sales in the area. 

A home inspector, on the other hand, looks for hidden issues, like water damage or structural damage. While the buyer usually pays for a home inspection before closing, many sellers opt to pay for their own inspections to uncover hidden issues before listing. 

The second type of closing cost relates to ensuring there is a clean title. These closing costs may include the following: 

  • A title search, which can cost a few hundred dollars
  • Paying off loans with liens on the property 
  • Buying a title insurance policy

Finally, the last type of closing cost is the agent commission. Seller and buyer agent commissions combined are typically between 5-10%, but you can negotiate with the agent, so it’s variable. 


When calculating how much you will make from your home sale, it’s important to factor in closing costs, including agent fees, attorney fees, title search and insurance charges, and more. By selling to a cash buyer, you can avoid most closing fees. We buy houses Arlington buyers love, so get in touch with us today. 

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