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Several taxes and fees are typically assessed at the time a real estate transaction is finalized, or closed. These expenses are called “closing costs.” Based on the city, county and state where the property is located, these costs vary widely. Although, as the seller, you can expect to pay less in closing costs than the buyer, you may still pay thousands of dollars. It’s important to understand seller closing costs so you can estimate how much will be deducted from the proceeds when your sale closes.

Here are some of the costs sellers are usually expected to cover:

1. Real estate commission - This is a percentage of the sale price. You would have negotiated this percentage with your real estate broker when you listed your property for sale. It is one of the largest costs that will be deducted from the sales proceeds.

2. Title and lien search - This process ensures that you, the seller, have the right to sell the property. It also finds out if any restrictions or allowances are attached to the land (e.g., an easement for power lines). Finally, it will discover any liens on the property, including mortgages, back taxes, or construction liens.

3. Clearing title defects - If the title search turns up any liens on the property, the seller will need to pay these off to ensure a clear title for the buyer.

Other closing costs may be assessed against the seller or the buyer, or may even be split. This greatly depends on the area where the property is located. Following are some of those costs:

1. Document stamps (also called doc stamps) on the deed - This is a state tax exacted from the sale of the property, due at the time the deed is transferred into the name of the buyer. In Miami-Dade County, Florida, for example, it is $0.60 per $100 of the sales price. Thus, doc stamps on the deed for a property being sold for $200,000 in Miami will cost $1200.

2. Document recording fees - Most counties assess a per-page document recording fee for deeds as well. The new deed being recorded for the mortgage is conventionally charged to the buyer. However, there is a deed that transfers title out of the seller’s name, and this is usually a seller cost.

3. Preparation of sale documents - These include the deed, bill of sale, no lien affidavit, and 1099 tax form. In some areas, these documents are prepared by an attorney, while in other cases the title company takes care of this process. Either way, there is generally a fee assessed. This fee is usually called an escrow fee when the paperwork is handled by a title company. Paperwork prepared on behalf of the seller is charged to the seller.

4. Prorations of homeowner association fees and property taxes - the seller will need to pay the portion calculated for the percentage of the year that they owned the home.

Since costs associated with closing the sale of a home are usually quite different from state to state and even city to city, it is wise to consult with a real estate professional about the closing costs typically incurred in your area. Your real estate agent is required by law to disclose all possible fees to you, so they are an excellent resource for understanding the local regulations that apply for your transaction.

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