For starters, closing costs are the various fees paid – some by the buyer, some by the seller, in order to finalize the home buying transaction. Many people are aware of closing costs for buyers but may not realize what is entailed in sellers’ closing costs.
Commission rates are usually around 5-6% of the final sale price, split between the buyer's and seller's agents. Therefore, on a $300,000 home, commission fees could total $18,000.
Once you officially transfer ownership of a home, the state, county, and/or city where the property is located will charge taxes and fees. Although sometimes these fees are split, it's pretty common for the seller to cover these costs.
A title insurance policy protects its owner from disputes about homeownership. There are two types of title insurance — lender’s (which protects the lender) and owner’s (which protects the owner).
The escrow process begins when a buyer makes an offer on a home. The “good faith deposit” or “earnest money” amount shows they are serious about purchasing the property and are deposited into an escrow account controlled by an impartial third party.
Although buyers and sellers are not required to hire an attorney in some states, it is still a good idea to hire one to look over the final contract. Please make sure you are ready to pay for their time, however. Attorney fees can range between $150 to $500 per hour for a good lawyer.
It is up to the seller to pay for prorated items such as property tax and utilities. The seller usually must pay these up to the sale date, at which point the buyer takes over the costs.