A Guide to Closing Costs for Home Buyers and Sellers

Buying or selling a house can come with a lot of costs – and a few unexpected ones if you’re new to the process. Here’s a guide to closing costs for buyers and sellers from our real estate team in Dallas, so you know exactly what’s included in this process and who is responsible for paying what.

Closing Costs When You Sell Your Home

As the owner of the property, you can expect your closing costs on average to be around 8-10% of the sale price of your property. Based on the median value of a home in Dallas, TX, which is around $214,400, this means that your costs will be between $17,152 and $21,400. As you can see, this is quite a lot of money – but it’s broken down into several different expenses:

• Real estate agent commission
• Transfer tax – Fortunately there is no real estate transfer tax in Texas
• Escrow fees
• Title insurance
• Prorated property taxes
• Attorney fees
• HOA fees (if applicable – for example, if you are selling a condominium or apartment)
• Credits towards closing costs

Real estate commission is usually the highest cost as it’s usually around 3% or more of your sale price. In addition, you are also responsible for the buying agent’s commission too (the real estate agent that represents the buyer), taking this total cost up to 6% or more of your home’s sale.

There are a few ways you can try and reduce this cost, including negotiating with your real estate agent to take reduced commission (unfortunately, you can’t negotiate the commission down with the buyer’s agent), selling your home yourself without the help of a real estate agent (which can be a lot of work and expense in itself), or selling your house directly to a cash for houses company (a process that requires no real estate agent fees at all). It’s important to look at each option carefully and decide what offers you the most benefit. After all, it ensures that you get the biggest return on your investment, which is often essential for making a purchase on your next home, furnishing it or even creating a nest egg.

Additional costs to consider include loan repayment fees (as some mortgages have a prepayment penalty or cancellation costs), any home improvements and repairs you had to do to make your house look more attractive to buyers (like painting, servicing heating/cooling systems, new appliances, and landscaping), and your moving costs to relocate you to your new home.

Closing Costs When You Buy a Home

Other than the cost of the property itself, there are other expenses associated with buying a new home that can amount to, on average, 2-4% of the purchase price. For example, a home that you buy for $300,000 will have closing costs for the buyer that amounts to between $6,000 and $12,000, so it’s important to budget for these expenses when you are looking for a new home. These costs can include:

• Appraisal fees – To confirm that the property is being sold at a fair market price
• Mortgage application fees
• Mortgage origination fees – This covers the lenders administrative costs for creating the loan
• Attorney fees – This is to ensure that the closing documents are in order
• Closing fee – This is an escrow fee paid to the company or attorney who conducts the closing of the property
• Inspection fees – To ensure that the property is sound and has no major issues that you or the lender is unaware of
• Prepaid interest
• Prorated property taxes
• Tax servicing fees
• Title insurance
• Notary fees
• Insurance – Your mortgage and property may require a certain amount of life and property insurance

Depending on the lender you choose, the type of property you are buying and the state the property is located in, some of these costs may be avoidable, so it’s worth it to do some research and get to know your different options before you bid.

If You Want to Sell Your Home, Our Cash for Houses Team Can Make You an Offer Today!

The Shiny Key Properties team is a leading property agency in the Dallas and Fort Worth Area. If you’re interested in selling your home quickly, want to sell your home without paying real estate agent commission or just want an honest evaluation to help you decide if you want to sell your home, contact us today for a no obligation cash offer for your property.