Calculating Closing Costs for the Sellers

Once an offer has been accepted on a home, many Charleston homeowners start to think about the money they will receive from the sale of their home. Closing costs are the fees that are due at the closing of the real estate sale and are what most people overlook when calculating how much profit they will make off the sale of their home.

Calculating closing costs for the seller is important because it helps in knowing just how much money a seller can expect to make off the sale of their home.

One of the benefits of closing costs is that most sellers don't need to pay them out of their own pocket. Unless you have very little equity in your Charleston, SC home, closing costs are normally deducted from the proceeds of the sale of your home at the closing table.

Three days prior to the actual closing, you and the buyer will receive a closing disclosure. The closing disclosure lists all the details of the sale with actual numbers so you can know the true costs and fix any errors before the closing day. We will go over the typical closing costs that sellers have to pay so you know how to calculate your closing costs.

Typical Closing Costs

Closing is when the buyer pays up, the seller gets paid, the paperwork is signed, and everyone else is paid as well. There are taxes, commissions, fees, and loans that need to be paid before the title can transfer from the seller to the buyer. Typical considerations when calculating closing costs:

• Mortgage/Lien Pay-Off
• Real Estate Agent Commissions
• Transfer Tax
• Property Taxes
• Owner's Title Insurance
• Escrow and Closing Fees
• HOA Fees
• Seller Concessions
• Attorney’s Fees

Mortgage/Lien Pay-Off

Before the sale can take place, any liens or mortgage against the title must be satisfied. Mortgages are loans that are secured by using your property as collateral, and liens are debts that are attached to your home by the courts. Liens can come from unpaid court judgments, debts, or bills from contractors.

Once you have signed your closing documents, your lender will contact you and let you know how much money is needed to pay off your mortgage.

If there are no mortgages or liens on the Charleston SC home, then this line item should not appear on the closing statement.

Calculating Closing Costs

Real Estate Agent Commissions

Real estate agent commissions are the most significant closing costs that a seller has to pay next to satisfying any mortgages or liens. Typically, both the buying agent’s and listing agent’s commissions are paid by the seller.

You can normally expect this number to be 6% of the sales price, 3% to the listing agent, and 3% to the buying agent. This commission is paid to compensate the agents for marketing your home, facilitating the transaction, and handling all the other details associated with selling your home.

If your home sold for $500,000 and the total commission was 6%, you would pay $15,000 to the buying agent and $15,000 to the listing agent.

Transfer Tax

The transfer tax, also referred to as Deed Stamps, is paid to the county and state. The transfer tax for Charleston, SC home sales is $1.85 per $500 of sales price, $1.30 goes to the state of South Carolina, and $0.55 goes to Charleston County.

If you sell a home in Charleston for $400,000, your transfer tax would be $1,480.

Property Taxes

The seller typically pays for the property taxes for the time they have ownership of the property up to the day of closing. The way this is calculated is by determining what you would pay if you owned the property all year, dividing that amount by 365 days, and multiplying it by how many days you owned the property.

If your property taxes would be $5,000 for the year and you stayed in the property for 180 days, you would pay the buyer $2,465.75 for the property taxes.

This is paid to the buyer because the taxes are paid on a yearly basis, which is after ownership of the property is transferred from the seller to the buyer.

Other Closing Costs to Consider

A title insurance policy is essential when buying or selling a home. The seller's title insurance policy protects the future owner from the financial burden of sorting out any title issues that could arise at closing or anytime in the future. This could come from a property dispute, or an unpaid debt to creditors, the government, or contractors.

There is also a title insurance policy for the lender. Typically, the owner's title insurance policy is paid by the seller and the lender's title insurance policy is paid by the buyer.

Escrow and Closing Fees

These fees cover the cost of processing all legal documents, including signing of the closing documents, recording the deed, and holding the funds for the purchase. Typical escrow fees are 1% of the sale price of the home or a flat fee (usually between $500-$2,000).

Other fees you may see are office expenses, copying costs, notary costs, and fund transfer fees.

The seller typically pays 50% of the escrow fees.

HOA Fees

Homeowners Association fees (HOA) are paid monthly and usually cover the cost of maintaining the community’s commons area. These fees can vary from community to community, but they can be as low as $50 a month or as high as $500 or more.

In the event that there is a delinquency on the HOA dues, the seller is responsible for paying those fees and any monies owed to lenders.

Seller Concessions

Seller's concessions are contributions the seller makes towards the buyer’s closing costs, prepaid expenses, or other items that help lower the amount the buyer needs to pay at closing

If the buyer is getting a mortgage to finance the purchase, there are certain limits on the total amount of seller concessions that can be offered. These limits depend on what type of loan the buyer is using, how big their down payment is, and if they're receiving any assistance with their down payment.

Attorney’s Fees

Closing a home sale in Charleston requires managing many legal documents. This is why some states, including South Carolina, require an attorney to handle the closing process. It's especially a good idea to use an attorney for the closing process if you are dealing with inherited properties, complex real estate transactions, or distressed properties.

A closing attorney is required to oversee the closing of your home in Washington, DC, and 21 states. Alabama, Connecticut, Delaware, Florida, Georgia, Kansas, Kentucky, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, North Dakota, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, and West Virginia are the states

Need Help Calculating Your Closing Costs as the Seller?

Check out this closing cost calculator to help you get an idea of what you will need to pay when you sell your next home.

Still need help calculating your closing costs? Let our team of real estate agents help you!