The Seller's Guide To Closing [Closing Costs and Much More]

Closing processes vary slightly depending on the type of transaction and local, state, and municipal laws. While the differences might be subtle, it's always good to know what steps to take when preparing to close. You'll need to speak with your realtor about what costs you, as the owner, will have to cover. 

Key Takeaways: 

  • How the closing process works for the seller
  • Potential closing costs the seller will incur upon closing
  • Define closing credits and how they can be used at closing
  • Resources for closing and transferring the title

The Closing Process For Sellers

Getting an offer is a great feeling, but the race is far from over. Once someone presents an offer, a plethora of tasks needs to be cleared before you can sit down to sign the paperwork. As mentioned previously, the process varies from state-to-state and even town-to-town. Regardless, there are a few common steps that each transaction must conduct before handing over the keys. 


You'll likely have an inspection soon after the offer. Whether their agent recommended it or the mortgage company required it, the buyer will hire an inspector to walk through your home and make sure everything is "up to code." Although the buyer will pay for the inspection, the seller will be responsible for solving any issues. 

Repairs and Renegotiation

Once the inspection is done, the seller has to fix all the problems. Whether you hire someone else to do it or solve the issue yourself, this is more time, energy, and money that you'll have to put toward the sale before closing. Also, any major issues might drive down the value of the home in the buyer's eyes. They might be inclined to lower their offer or ask for closing credit to fix the problems. Renegotiation is a standard part of home sales. 


Mortgage companies require the buyer to have an appraisal to ensure their loan will be covered. In other words, they want to be sure that they are lending a reasonable amount compared to the home's value. Again, no expense to the seller, but you'll have to work with an appraiser to let into your home.

Title Check

The title company will look at tax records and evaluate all legal aspects of the title. They are responsible for making sure the closing process goes smoothly, and the title can be transferred to a new owner without implications. 

Potential Closing Costs For The Seller

Although you're not responsible for the inspection and appraisal fees, there are still a few costs that might arise on the seller's side. 

Buyer's and Seller's Agent Commission

When signing the contract, the homeowner will agree to a certain commission or percentage of the sale, which will be paid to the agent at closing. A typical commission is around 5 to 6 percent. However, some agents will agree to less depending on the circumstances. HomeTraq selling agents have agreed to a 4 percent commission in exchange for HomeTraq's provided Pre-Listing services. 

The buyer will likely have an agent as well. The commission will be split between the buyer and seller agent at the time of closing. It might not be a 50/50 split because it depends on the contract. If the seller finds their own buyer, they get to keep the commission, but the seller's cost stays the same regardless. 

Title Insurance

Some states require the seller to purchase title insurance when transferring the deed to your home. Title insurance protects the seller from any mishaps or processing errors that might occur from the transfer. The lender's title insurance covers their interest in the property until the mortgage is paid off. A homeowner's title policy protects the owner's right to the property. 

Early Payoff/Mortgage Fees

Sometimes a mortgage contract will include an early payoff fee for different reasons. If the seller has an outstanding balance or their contract includes an early payoff fee, the seller is responsible for covering the difference. Any of these fees will be due at or before closing. Also, any previous liens or judgments on the property are the responsibility of the current owner. Any other outstanding dues before the time of closing, such as homeowner fees, garbage collection, and utilities, are the responsibility of the homeowner until the title is transferred to the buyer. 

Any Issues from Inspection

Some mortgage companies require an inspection before transferring the money. An inspection will happen soon after an offer is made and well-before closing to ensure the current owner has enough time to resolve potential issues before the new buyer moves in. If the inspection finds any problems, the homeowner is responsible for solving the problems and will incur the cost. This expense can vary widely depending on the condition of your home. 

Closing Credits

These are fees that the seller is responsible for paying. Sometimes sellers will offer "credits" or cash incentives for someone to buy their home. You will typically see this in cases where the home needs renovation in certain areas. The seller chooses to offer a credit to the buyer to fix it rather than fixing it before closing. It is sometimes more convenient to provide closing credit as a seller if you need to sell your home quickly.

Closing/Settlement Process Resource The American Land Title Association is a national association for title insurance companies. The Consumer section of their website provides a link to “HomeClosing 101,” a guide to settlement and costs, as well as a detailed description of the closing process from the perspective of the title insurer and title searcher.


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