Lenders, buyers, and sellers all have different responsibilities when it comes to closing costs. The seller has their own closing costs to cover, although some sellers find ways to compensate for this.
They may include the costs in the purchase price or by asking for a credit at closing. If a seller chooses to include the cost in the purchase price, they will need to provide proof of funds at closing.
This is an important consideration because if they don't have enough money on hand, they could be required to sell their home first before buying another property.
The buyer is responsible for paying their own closing costs, which includes any lender fees and third-party fees associated with processing their loan papers. These fees typically range from $300-$600 depending on how much money they are borrowing and what type of loan they have.
For sellers, specifically, paying any amount of money can seem counterintuitive. After all, you’re trying to make a buck off this sale. If you’ve been looking at a seller closing costs calculator and not liking what you’re having to pay, pay attention to these tips for reducing closing costs.
Go for “Sale by Owner”
Selling a house by owner is a great way to reduce closing costs. Many home buyers don’t have the necessary funds for the down payment and closing costs, which can be as high as 5% of the property value.
If you are selling a house on your own, you will have to pay for all of these expenses. However, if you are using an agent, they will typically cover these costs in exchange for their commission.
The commission fee is usually between 3-6% of the property’s sale price. In addition to this, they may charge other fees such as advertising and marketing.
However, if you don’t want to pay any commissions or other fees then it’s best that you sell your home by owner and negotiate with buyers directly on your own terms.
Not Paying for Buyer Closing Costs
This is an easy one.
The seller should not pay the buyer's closing costs. The buyer should be responsible for their own closing costs.
Paying closing costs will put a dent in the profit margin for both parties. It is also unclear if there are any tax advantages to paying them.
If sellers are prudent and want to make what they want to make on their house, they should avoid transactions in which they are asked to pay for closing.
Try to Get a Lower Commission from an Agent
It is not uncommon for sellers to be charged a commission by the real estate agent.
However, there are ways to negotiate this fee down.
The seller should make sure that they are aware of the standard real estate commission rates before they start negotiating. It is important to have a good understanding of what the market average is and what other sellers in their area are paying.
The seller should also be aware of the fact that some agents who are not experienced might be willing to negotiate commissions in order to get the listing. This usually happens when an agent needs more business.
After doing some research on their own, the seller can approach their agent with a lower offer if they feel confident about it.
The negotiation process will depend on how much money is involved and how much flexibility there is from both parties.
