How to Minimize Closing Costs When Selling Your Home
Closing cost is an important aspect of selling a house. As a seller, reducing closing costs could mean more money in your pocket. Good examples of closing costs include appraisal fees, title searches, surveys, credit reports, title insurance and commissions.
While there is no way to completely avoid these fees, below are some top strategies to reduce them.
1) Negotiate on Commission
If you are working with a realtor to sell your house you would be paying commissions on the sale price which may range from 4% – 7 %. For example, 4% commission on a $100,000 sale price home would amount to $4,000. Whereas, if you negotiated a 3% commission instead of 4% would amount to $3,000 in commissions. This means you can save more money in your pocket if you negotiate fees with your realtor before you hire him or her. Interviewing 3 or more realtors is not only a good way to find an agent you get along with but also a chance to find lower rates.
2) Split Costs With Buyer
Who pays for what depends on the market. In a seller’s market buyers usually pay more than the seller and in a down market the buyer usually negotiates with the seller to pay a bigger portion of their closing costs. If it gets confusing, ask your realtor for a breakdown of what you and the buyer are expected to pay in closing costs. Typical closing costs include:
- Attorney’s fees
- Transfer or documentary taxes
- Title insurance
- Taxes or Assessments
- Recording fee
- Inspections
Buyers generally pay more than sellers with a major part of their expenses tied to their loans. Buyers can also negotiate on some of their closing costs that they expect the seller to pay.
3) Research On Title Companies
The job of a title company is to investigate the history of the property and search for restrictions or liens to ensure the title is clear. Title search fees could vary depending on company. You can save a lot of money by doing research on various companies and shopping around on their fees. Some companies also have a flat rate for their services and may include lender’s title policy and title insurance.
4) Reduce Your Hold Time
If you are receiving multiple offers for your property and you’re reviewing these offers, real estate agent will list the status of your property as “pending”. Some home owners only need a couple of days to decide while others need more time. Deciding “as soon as possible” could help in reducing your closing cost. For example, a sale that closes in 2 weeks will incur lower holding costs versus a sale that closes 2 months later. Example of these holding costs include property taxes, utilities and insurance.
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