Average closing costs for a seller are 8% to 10% of the final sale price. However, For Sale By Owner closing costs are up to 5% or 6%. You can save up to 3% in average real estate commissions when you sell a house by yourself. Although this might seem less, it can save you thousands of dollars.
There are Flat Fee MLS companies you can list with, that will help you save the aforesaid 3% agent’s commission. Houzeo is one of the top alternatives to list your property.
What Are For Sale By Owner Closing Costs?
Listing agents usually charge a commission of 2.5% – 3%. In For Sale By Owner method, you sell your house yourself. So, For Sale By Owner closing costs refer to the expenses you incur without a listing agent’s commission.
As a result, For Sale By Owner closing costs are usually less than traditional closing costs. This is how you save more the FSBO way.
What Do You Need to Pay in For Sale By Owner Closing Costs?
Here is what you need to pay as FSBO closing costs:
Buyer’s Agent’s Commission
While you save the listing agent’s commission, you must pay the buyer’s agent’s fees. It is usually 3% or more of the final sale price, which makes it a huge chunk of closing costs.
Attorney Fees
You must hire an attorney to draft the FSBO contract and handle potential legal troubles. Their cost ranges from $150 to $500 per hour.
Home Staging
You can opt for home staging to fix the leaky faucets, improve curb appeal, or declutter the home. Home staging costs around $3,500 to $7,000.
HOA Fees
The Homeowner Association (HOA) charges $100 to $400 to update ownership records. You must also settle all unpaid HOA dues before the closing date of your home sale.
Transfer Tax Charges
State or local governments charge a non-deductible transfer tax on property sales. The cost depends on state to state.
Escrow Fee
An escrow is a third party that holds the sale amount until contract conditions are met. They typically charge 1% to 2% of the purchase price, split between buyer and seller.
Seller Concessions
You can also pay a part of the buyer’s closing cost for a faster sale. This is called a seller concession. It is always best to negotiate with the buyer what costs they want you to cover.
Property Taxes
During the home sale closing, you’ll pay property taxes for the time you have owned the home.
Title Search
A home title search looks through various records to find any claims against the property.
Owner’s Title Insurance
Owner’s title insurance ensures the buyer isn’t caught off guard by ownership issues or fake documents post-sale. It’s advisable to purchase owner’s title insurance, and it costs between 0.5% to 1% of the home selling price.
Home Inspection Fee
A home inspection uncovers any potential issue that could hinder your sale. The home inspector looks for structural, electrical, or plumbing issues. Fixing these issues can boost your chances of a sale. It costs around $400 to $500.
Home Appraisal
It’s important to know the Fair Market Value of your property when opting for FSBO. Therefore, it’s important to have a home appraisal by doing a comparative market analysis.
A home appraisal provides an unbiased, and accurate price which gives you leverage during negotiation.