Seller closing costs typically range from 8% to 10% of the sale price, about $39,000 on a $438,466 home. Nearly 40% of sellers worry about these steep expenses. Know the key disadvantages of seller paying closing costs as they can eat into your profit fast.
Traditional agent commissions add about 6% ($26,307). Post-NAR settlement, sellers may skip the buyer’s agent fee. With a flat fee MLS service like Houzeo, you avoid the listing commission and still reach serious buyers.
KEY TAKEAWAYS:
- Seller closing costs typically include agent fees, title services, transfer taxes, and buyer concessions, all of which impact your net profit.
- When you cover buyer closing costs, it may help secure offers faster, but it lowers your earnings and gives you less room to negotiate on price.
- Disadvantages of sellers paying closing costs include slower closings, limited repair budget, and weaker price negotiation.
- You can reduce seller closing costs by listing through a Flat Fee MLS service, going the FSBO route, or negotiating a smart fee-sharing arrangement with the buyer.
What Closing Costs Can the Seller Pay?
When selling a house, it’s important to know what closing costs the seller pays. These expenses can vary based on your location, deal terms, and property type, but they directly affect your bottom line. Here are the common closing costs for sellers:
- Agent Commission: Often the biggest cost, this includes fees for both the seller’s and buyer’s agents—typically totaling 5% to 6% of the sale price.
- Title Services: Covers the title search and, in many cases, the owner’s title insurance to protect against future ownership disputes.
- Transfer Taxes: Sellers typically pay transfer taxes, which are government-imposed fees based on the property’s sale price and vary by state.
- Escrow Fees: You’ll also pay escrow fees to the settlement or escrow company handling the transaction and fund disbursement.
- Unpaid HOA Dues: If your home belongs to a homeowners association, expect to pay unpaid HOA dues through the closing date, along with any required documents or transfer charges.
- Mortgage Payoff: Includes your outstanding mortgage balance, interest, and possible prepayment penalties.
- Attorney Fees: In some states, sellers must pay an attorney to review contracts and handle legal paperwork.
Use a free sellers closing costs calculator to estimate closing costs for seller based on your location and deal terms. It helps you understand what is included in closing costs and plan ahead.
How Much Are Closing Costs for Buyers?
Closing costs for buyers usually range from 2% to 5% of the home’s purchase price. These charges cover services needed to secure the mortgage and transfer ownership. Here’s what is included in closing costs on a house from the buyer’s side:
| Cost Item | What It Covers |
| Loan Origination Fees | Lender charges for processing the loan: includes application, underwriting, etc. |
| Appraisal Fee | Pays a licensed appraiser to confirm the home’s fair market value. |
| Credit Report Fee | Covers the cost of pulling the buyer’s credit history for the mortgage. |
| Title Insurance (Lender’s) | Protects the lender from title disputes; buyer often pays this. |
| Escrow Fees / Closing Fees | Charged for managing the transaction, handling funds and documents securely. |
| Prepaid Interest | Covers interest from closing until the first mortgage payment. |
| Property Taxes (Prorated) | Buyers prepay taxes from closing to the next billing cycle. |
| Homeowners Insurance | Most lenders require buyers to pay the first year’s premium at closing. |
| Recording Fees | Paid to record the deed and mortgage with the local government. |
| Attorney Fees | In some states, buyers pay a lawyer to review contracts and handle paperwork. |
| Flood Certification Fee | Determines if the home lies in a flood zone. |
| Inspection Fees | Covers home inspections, often including pest, radon, or lead-based paint tests. |
| Private Mortgage Insurance (PMI) | Required if the down payment is under 20%; may involve an upfront premium. |
Why Does a Seller Pay Closing Costs?
Seller paying closing costs is a common strategy to make listings more attractive and close deals faster. But closing costs paid by the seller come with trade-offs. Here’s why sellers choose to offer concessions:
- You Attract More Buyers: Buyers often struggle with upfront costs. When the seller pays closing costs, it reduces their burden and can lead to more offers. Know what closing costs can the seller pay before you commit to concessions.
- You Sell Faster: A seller covering closing costs helps buyers close more quickly. With lower out-of-pocket expenses, buyers move through financing faster, reducing delays.
- You Boost Your Negotiation Power: By seller paying closing costs, you may hold firm on your price. It gives you leverage to maintain your asking price while still offering value to the buyer.
How the NAR Settlement Impacts Seller Costs
The 2024 NAR settlement changed how real estate commissions are offered. Sellers no longer have to list buyer agent fees on the MLS.
This shift gives you more control over seller closing costs. You can skip the buyer agent fee or negotiate it privately—and instead offer buyer concessions if needed to close the deal faster.
What Are the Disadvantages of Seller Paying Closing Costs?
Offering to cover closing costs for the buyer might help close a deal, but it often comes at a steep cost to the seller. Here are the key disadvantages of seller paying closing costs:
Your Profit Takes a Hit
Seller-paid closing costs come directly out of your sale proceeds. That’s money you won’t pocket, even if you’ve priced your home competitively. When you calculate closing costs for sellers, include buyer concessions as they lower your net profit.
You Lose Repair Flexibility
If you’ve already offered concessions, you may not have room left for repairs. A tight repair budget can backfire if inspection issues arise, forcing you to either spend more out of pocket or risk losing the buyer.
Loan Rules May Limit Your Offer
Loan programs like FHA, VA, USDA, and even conventional loans restrict what closing costs the seller can pay. If your concessions exceed those limits, it can trigger delays or force renegotiation. Always check what closing costs can the seller pay under the buyer’s loan terms.
You Risk a Slower Closing
When sellers cover buyer closing costs, lenders may pause for extra review to ensure everything complies with loan guidelines. This can stretch timelines and increase your holding costs, like additional mortgage payments, taxes, or utilities.
How to Reduce Your Share of Closing Costs on a House as a Seller
Closing costs on a house can quickly eat into your profit, especially in states like California, where seller-paid title fees and escrow costs can be steep. In Texas, sellers often pay both the owner’s title policy and escrow fees, increasing their total out-of-pocket costs.
Here are some ways to reduce seller closing costs, especially when it comes to agent commissions:
- Use a Discount Broker: You can save thousands on closing costs the seller pays by working with a low-commission agent. Discount brokers typically charge 0.5% to 2% on the listing side, far less than the traditional 2.5% to 3% listing fee.
- Sell For Sale By Owner (FSBO): When you sell FSBO, you skip the listing agent altogether. That’s one less commission to pay—and one of the most effective ways to reduce seller closing costs without compromising your home price.
- Use a Flat Fee MLS Service: A Flat Fee MLS service helps you get on the MLS without paying a full agent commission. You set your terms and price, and you stay in control.
Curious how much you’ll pay to sell? Check your state below to see typical seller closing costs in your area. Knowing these costs upfront helps you plan your budget and avoid surprises at closing.
