What is a closing cost? Closing cost is the total expense incurred by the seller which includes brokerage fees, notary/attorney fees, related taxes, etc. at the time when the title to the property is conveyed to the buyer.
If you are selling a property then you should know that there is a difference between the money that you receive from the buyer and the actual amount you make in the entire process of selling your property. Closing costs while selling your house is one of the biggest factors that will affect your profit or loss. So, the next time someone asks you “What is the selling price of your home?” or “What is the closing cost incurred?” you will know what to answer.
Satyendra Kumar from Hadapsar, Pune wants to know the charges that he has to pay while selling a house. Kumar turned to Open House in Magicbricks which is a Q&A forum where all property related questions get answered.
Bhardwaj says “For sellers the biggest closing cost is the real estate agents commission. The traditional commission is 1 or maximum 2 per cent of your house’s sale price. In some cases the broker charges 1 or .5 per cent each from buyer and seller.”
While the brokerage costs vary from one city to another, these are some other closing fees you may encounter. Some of them are listed below:
Transfer Taxes or Recording Fees: These are the taxes that are imposed by the state or local government for the transfer of property title from one person to another.
Attorney Fees: You need to pay attorney fees in case you have availed his/her services for the closing cost settlement amount. In many cases both buyers and sellers have their attorneys, accordingly both the parties pays the attorney fees.
Notary Fees: The fee charged by the notary is to verify the identity of the property and further make sure that the documents are fair and are further executed properly.
Repairs: While selling your house, cost of repair is usually a mutual decision between the buyer and the seller. Either the buyer takes it upon himself/herself or it is borne by the seller.
Recording Fees: This fee is paid to show that all the debts related to the property have been fully paid without any delay.
It is advisable to hire a professional legal expert or realtor to deal with all the legalities and documentation which is needed while selling off a house.