A recent study showed the average closing costs on real estate transactions in 2021 were $6,837 including taxes, that’s a 12% increase from the year before.

In most cases, sellers pay the bulk of these expenses from the proceeds they receive from the sale, but the buyer must pay out of their pocket. Costs vary depending on location, with D.C. leading the way, and Delaware and New York following close behind.

How much is the closing cost for the seller in your area? It depends on your circumstances.

Keep reading to find out what you need to know about closing costs for the seller.

What Are Closing Costs on a Home?

Closing costs are fees that buyers or sellers must settle to transfer ownership of a property.

Local real estate laws and regulations have a major impact on which fees you’ll pay to sell your home and how much these amount to. Some states even have different terminology for closing costs.

In some cases, the seller may agree to pay some of the buyer’s closing costs to facilitate the sale. These are the fees associated with closing when you’re selling a home:

Deed Transfer Tax

Also known as real estate transfer tax, or simply transfer tax, your state or local government levies this tax. Estate tax and inheritance tax are a type of deed transfer tax, too. Estate tax and inheritance tax are a type of deed transfer tax, too.

This amount covers the cost of changing the deed information to that of the new owner. The amount you pay depends on the value of the property.

Recording Fee

This is another fee that varies depending on the location of the property. It covers the cost of recording and filing the mortgage and deed information in the public record.

Some states combine the recording fee and transfer fee into a single payment, although the recording fee is usually a set amount per page rather than a percentage of the home’s value.

It’s in the buyer’s best interest to ensure this process takes place, as many lenders won’t finalize a mortgage without it, but buyers and sellers frequently split the costs. 

Title Search Fees

A property title search will reveal if there are any liens or ownership claims on a property. Buyers and sellers typically split the costs of a title search.

If the title search reveals a lien on the property, the seller must pay it before the deed transfer proceeds. In some cases, the buyer might opt to pay this amount to secure the sale.

Real Estate Commissions

Real estate agents usually receive their cut of the sale once the deal closes. The seller pays both the real estate agents and brokerages involved in the sale.

In most cases, this amounts to about 5% or 6% of the sale value, split between the two agents. Real estate agents’ fees cover the costs of marketing the property and guiding both buyer and seller through the sale process.

Attorney’s Fees

Although it’s not a legal requirement in some states, hiring an attorney can help streamline the home-buying process. They assist with most of the paperwork required for the sale, attend the closing process, and help resolve disputes.

In some cases, an escrow or a title insurance representative can oversee the closing procedure.

If you decide to hire any of these professionals, you pay for their services.

Mortgage Payments

Sellers must pay the outstanding balance on their mortgage when they sell their home. Plus, you may need to pay penalties for settling this amount early.

According to the Consumer Financial Protection Bureau, your lender must include this information in your mortgage contract. So, check this document while calculating your closing costs.

If you pay off your mortgage before the end of your agreement, you may pay penalties based on how much you still owe according to this agreement. This may amount to a few months’ interest payments or around 3% of the outstanding amount.

When Are Closing Costs Due?

Buyers must settle their closing costs when the home changes hands, which is a date indicated on the sale agreement, called the ”closing date”.

Sellers usually pay these costs out of the proceeds from the sale of their home, unless their closing costs amount to more than the amount they’re selling their home for.

Buyers must arrive with a cashier’s check, a certified check, or cash to settle the closing costs.

This process is often called ‘settlement’ and the money paid in this process is ”cash to close”. Cash to close usually includes the sum of everything the buyer needs to pay, minus any credits provided by the seller. 

The buyer’s lender usually informs them about this amount in the closing disclosure. 

Who Pays Closing Costs?

All closing costs are negotiable between the buyer and the seller, and both may agree to pay more than they should, depending on how much they want to conclude the sale.

In most cases, each party is responsible for certain costs. 

What Are the Closing Costs for the Buyer?

The buyer pays most of the costs associated with a home sale, and they usually need to pay these costs upfront. In some cases, they can include these costs in their mortgage, but this service usually comes with exorbitant interest rates.

If the buyer can’t afford to pay some of the closing costs, they can ask the seller to split the costs with them.

In most cases, the seller is responsible for the following closing costs:

• Title Search
• Title insurance
• Loan application fees
• Loan origination fee
• Home inspection costs
• Home appraisal fees
• Property surveying fees if necessary
• HOA fees if applicable

What Are the Closing Costs for the Seller?

Unless they agree to pay some of the buyer’s closing costs, the seller is responsible for the following:

• Mortgage settlement
• Mortgage penalties
• Existing liens
• Real estate agents commission
• Prorated property taxes

Although the seller doesn’t pay as many closing costs as the buyer, their overall contribution is usually more and can amount to as much as 10% of the home’s sale price, excluding any outstanding mortgage payments. 

Should I Pay The Buyer’s Closing Costs?

While it might seem like a waste of money to pay the buyer’s closing costs, this practice has a few benefits for sellers. These are:

Increases the Pool of Buyers for Your Home

High closing costs can put buyers off, especially if they don’t have the money to pay these costs in cash along with their deposit.

In these cases, they’ll need to include the closing costs in their mortgage. If they don’t qualify for this extra finance, they might withdraw their offer.

Usually Means a Faster Sale

It can take longer to sell your home if you refuse to pay the buyer’s closing costs.

Most interested buyers will request that the seller pays some of the closing costs. If the seller doesn’t agree, they’ll keep shopping around until they find a home they can afford. 

Insisting the seller pays closing costs means they’ll need to approach their lender for a larger mortgage, which delays the approval process.

Reducing Closing Costs for the Seller

As a seller, the easiest way to reduce closing costs is to refuse to pay any of the buyer’s closing costs or increase your home sale price to include closing costs. You can also ask the buyer to pay some of your costs.

These tactics only succeed in a strong seller’s market. 

Another area where you can save money is on realtors’ commissions. Try negotiating with your real estate agent for a reduced fee, or sell your home yourself. 

While selling your home on your own isn’t a task for the faint-hearted, it’s a lot cheaper than working with a real estate agent. Finally, you could consider selling your home to a cash buyer. 

In most cases, cash investors don’t need to wait for mortgage approvals or a home inspection, so you’ll enjoy a much faster sale, too.

Selling your home for cash means you don’t have to pay the real estate agent’s commissions. Depending on your circumstances, a cash investor may offer to pay some of the closing costs to speed up the sale, too.

Selling Without the Hassle of Closing Costs

Selling to a cash buyer is an obvious way to save on closing costs for the seller. Plus, you’ll enjoy a faster sale.

There are risks associated with selling your home this way, though. Some of these companies offer rock-bottom prices and employ high-pressure tactics to the detriment of the seller.

With iBuyer.com, you don’t need to worry about these issues. We can provide you with a market-related valuation of your home in minutes and connect you with a reputable, qualified cash buyer if you’re interested.

Simply enter your address on our home page, and you’ll receive a fair offer for your consideration.

The post How Much Are Closing Costs for the Seller? appeared first on iBuyer Blog.

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Average house prices in the US have risen 6.6% in the last 12 months. Now, the average home costs just over $379,000.

Whether we’re in a buyer’s or seller’s market is up for debate. But as the cost of living increases alongside the market, it’s becoming more challenging to buy.

Even if you do save up for a deposit, there’s a necessary expense you mustn’t forget: closing costs.

Closing costs are split between the seller and buyer. Each owes fees to different parties. Some buyers use sellers assist, or seller concessions, to cover their closing costs.

This clever way of restructuring your sale or purchase can benefit both the buyer and the seller. Read on to learn more about sellers assist and whether you should consider it for your property.

What Is Sellers Assist?

Closing costs are an oft-forgotten expense. But if a buyer doesn’t budget for them, it can be detrimental!

Closing costs for a buyer average out at between 3-6% of the cost of the home they’re buying. For sellers, the cost is usually lower.

Closing costs on a real estate transaction include insurance, taxes, and sale fees. Some common examples are:

• Property appraisal fee
• Survey fee
• Attorney fee
• Underwriting fee

For buyers in the US, the average closing cost total per property sale in 2021 was just under $7,000.  

As closing costs are such a large expense, sometimes the seller may help the buyer cover their end. This agreement is called sellers assist.

However, sellers assist does not mean that the seller loses $7,000! Here’s how the agreement works for the buyer and the seller.

How Does Sellers Assist Work?

How can a seller fork out an average of $7,000 without losing money? Because the agreed-upon amount is then factored into the house sale price!

For example, if a buyer wants to purchase a $400,000 home, their closing costs may come out at $12,000. As that is a large sum of upfront payments, they may ask the seller to pay. The seller will have the capital on hand from having sold their home.

However, the buyer will then pay the seller the closing costs as part of the house sale. In other words, they’ll buy the house for $412,000.

Though the buyer will still have to pay the costs eventually, they’re now on finance. The upfront costs transition to becoming part of the mortgage.

There are regulations for the total value of closing costs that your seller can cover. For a typical house purchase, it ranges between 3% and 9% of the total house cost, depending on the details. Sellers assist for investment properties is capped at 2% of the total house sale.

Other regulations determine that the new house price must still sit reasonably within the appraisal of its value. But within those two limits, buyers and sellers are free to make whatever deal suits them best.

Is Seller Assist a Good Idea?

For a buyer, sellers assist cancels out closing costs for the time being. Does that mean they’re always a good idea?

Generally speaking, all buyers have a limited amount of capital on hand for a down payment. When an average of $7,000 is sucked out of that sum, it means fewer properties are available to them.

However, if you can buy a home with sellers assist, you can use all of the capital for the house deposit. That means you can invest in more valuable properties.

Over time though, the costs will be greater. The closing cost value is now added to the sale price. Buyers will pay interest on the value of those costs in their mortgage payments.

Whether they’re a good idea for you as a buyer is a personal decision that depends on your financial planning.

Why Sellers Might Help You

As we mentioned, sellers can also benefit from sellers assist.

Whether sellers assist is offered on a sale is completely at the discretion of the seller. Many prefer the simplicity of not offering sellers assist on their property. But it can be beneficial, especially for those trying to sell quickly.

When sellers assist is available, the pool of potential buyers expands substantially. Now, those who couldn’t afford to make an offer may consider it.

In a buyer’s market, it can also help your property stand out. If buyers are debating between several properties, but yours has concessions, it could swing their choice in your favor.

Most importantly, seller concessions essentially cost sellers nothing. They do have to pay for the costs upfront. But then they receive that capital back from the higher sale price.

It is a very low-risk, low-cost strategy for marketing and moving your home in any market.

Advantages of Sellers Assist 

Sellers assist can benefit both parties. The major pros are efficiency, security, and choice for the buyer and seller.

Faster and More Secure Sales

Even if a buyer is aware of closing costs, they can only find out the final sum a few days before the sale. What if they’re higher than expected and the buyer can’t pay? That could slow down the sale, or even make it fall through.

When a seller covers these costs, it reduces these risks.

Higher Sale Price

As we explained, the buyer pool expands when sellers offer concessions. This increases competition between the buyers, and can lead to higher offers! Even if you sell to a buyer who didn’t need sellers assist, they may have offered so high because of the competition.

More Purchasing Opportunities

Of course, there are benefits for the buyer too. If a seller offers concessions, they have more capital to play with. That means that can invest in more expensive properties.

But buyers can also use this capital to stand out! As closing costs are reduced or eliminated for the buyer, they can make a higher offer. Especially in a seller’s market, this makes it more likely that the seller will choose their offer.

Drawbacks of Sellers Assist 

Overall, there are few drawbacks to sellers assist, especially for the seller. But buyers should consider these two points.

More Expensive Over Time

Sellers assist usually directly increases your mortgage total. This adds to your mortgage payments. If you don’t pay your closing costs upfront, you’ll be paying more to finance them.

Potential for Rejected Offers

Not all sellers want to offer seller concessions. As a buyer, if you make an offer with sellers assist attached, your offer may be declined.

This may feel counterintuitive, as the agreement has little to no impact on the seller. Surely they’d rather take a higher offer and pay concessions for a faster sale! But it’s not always the case, and could jeopardize your offer’s success.

However, if your only way to buy is with concessions, there is another option.

If You Can’t Buy With Seller Concessions

It may be possible to create a similar concession arrangement with your bank. Just like the seller, they’ll pay your closing costs, then add them to the sale price.

This is the worse of the two options, though. You will pay more over time, but some banks will also increase your interest rate to offer this service! By contrast, sellers assist shouldn’t come with any change in your mortgage interest rate.

Your property may then cost you far more than it’s worth by the time your mortgage payments are over. In this case, it may be better to find another property that offers sellers assist. Or you could lower your overall budget and buy without concessions.

Tax Implications of Sellers Assist

Sellers assist increases the total sale price of a home. Does this affect how you pay tax on your sale or purchase?

Usually, the tax implications are minimal. Of course, you should check with a lawyer that this is true in your case. But since the sale has only increased by a few percentage points, it shouldn’t have a large impact.

While there will likely be no tax increase, sellers assist may open up the way to tax deductions – specifically, mortgage interest tax deduction. If your agreement includes mortgage discount points, you may be able to get a tax deduction.

As always, check with your lawyer whether this applies to your case before deciding.

The Simpler Sale Solution

Sellers assist is a modern solution that can help both parties. It speeds up house sales and attracts more buyers. But it can still involve complex negotiations to decide what will and won’t be covered.

There’s a better way to shift your property quickly and painlessly: accepting a cash offer.

Selling your home for cash eliminates closing cost negotiations between the two parties. And it will never involve a chain.

How much could you earn from an instant cash offer to sell your house? Enter your address in our online calculator to find out now!

The post What is Sellers Assist, and Is It a Good Idea? appeared first on iBuyer Blog.

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The average sale price of a home in the US is $507,800.

Depending on your situation, selling your home could be ideal for you right now. It’s worth bearing in mind, however, that selling a home isn’t always easy. Several things will affect the value of your home, as well as how easy it is to sell.

Because of this, a lot of work may be involved. There’s a good chance it will take longer than you might expect to sell your home, and this will almost certainly include multiple showings.

For a rundown of how many showings before an offer, and how to increase the value of your home, keep reading.

How Many Showings Before an Offer?

How many showings to sell a house? It’s hard to say.

There’s a range of factors that will affect how interested people are in making an offer or buying your home. In most cases, however, it generally takes somewhere between 10 and 25 showings to sell a house.

With that in mind, it can sometimes take just a few showings, and others can take many more. This will go hand in hand with how long your home is on the market. Some get bought in less than a week, and others can take several months to sell.

Do You Have to Show Your House?

When you decide to sell your home, there’s a good chance you’ll still be living in it. This can make showings very inconvenient. You’ll need to keep the house in a good state at all times and be prepared to have potential buyers view the house at times that suit them.

Fortunately, more sight-unseen offers are happening these days due to advanced technology. People can use things like video listings, digital walkthroughs, and virtual tours to get a detailed look at a property from a remote location. This is beneficial for both the buyer and the seller.

It’s still the case, however, that people prefer to see properties in person before making an offer as they’ll get to see things in more detail and get a better feel for the property. It also makes it easier for them to notice any issues. As such, most property sales tend to rely on in-person viewings.

How to Avoid Showings

It may be the case that you want to avoid showings completely. Fortunately, there are solutions for this. Companies like iBuyer.com allow people to sell their homes online quickly and easily without the need for any viewings.

You can enter your address on our site, and using algorithms along with publicly available information, we’ll be able to provide you with a cash offer for your home. Selling your home “as is” means that, on top of showings, you can also avoid things like staging and repairs.

When you request an estimate from us, it takes less than 48 hours for us to provide an offer. You’ll then be able to close (sometimes in just 10 days). After that, we can determine a move-out date that suits your needs.

Why Might a Home Get No Offers?

The more offers on your home, the easier it will be to sell. In some cases, however, you might struggle to get any offers. This can happen for a range of reasons.

Pricing

One of the most common reasons a seller doesn’t get any offers on their home is that it’s priced too high. It can be difficult to settle on a price, and you want to get as much as you can for it. At the same time, you need to be realistic and don’t set your expectations too high.

You might also struggle to get viewings if the price is too low. This is because people see a low price as a red flag and might assume there are problems with the property. If someone looks at a listing and the deal seems too good to be true, they’ll quickly move on to other options.

Unusual Features

Making home improvements can increase the value of a property, but people often add unusual and unique features to their homes. If you do this, it’s important to remember that not everyone has the same tastes as you. Something like a large mural can add character to a home, but that sort of thing isn’t for everyone.

While it may seem boring, a more generic home is generally easier to sell. If any potential buyers want to add their own unique features they’re free to do so, but people are unlikely to want to buy a property if there is something significant that puts them off.

Factors Beyond Your Control

Unfortunately, there can be various factors beyond your control that can make it harder to sell your home. An example of this would be if the neighborhood (or even the city) has become less desirable since you purchased the property.

Other Factors That Can Influence Your Showings

There are many more factors that will affect how many offers you’re getting. With some of these, you can take action to make your home easier to sell. It can be a good idea to look into these before you put your house up for sale as you’ll be able to decide on a more suitable listing price.

Market Conditions

In a buyer’s market, there are more homes available than buyers. This means that people have plenty of choices, and as a seller, you’ll have competition. In these conditions, it will generally be harder to sell your home.

In a seller’s market, the opposite is true. There will be more buyers, and fewer homes, which will likely increase the number of viewings you’re getting. It also increases the chance of people making offers shortly after viewing your home – maybe even after the first viewing.

In the US, seller’s markets are generally more common than buyer’s markets. As a seller, this will make things easier for you.

Time of Year

The time of year can affect both how many viewing you get, as well as how many you’ll need before you get an offer.

In the warmer months of the year, people are happier to go around viewing different properties. As such, you’re likely to get more casual viewings. This means that more people will see your property, but they might not be as likely to make an offer.

Conversely, in the winter, people aren’t as likely to view a property unless they’re very interested. This means fewer viewings, but each viewing is more likely to be followed by an offer.

This will vary depending on your location. If the weather in your area doesn’t vary as much, there won’t be as much of a difference in terms of viewings and offers.

Home Condition

You want to make sure your home is in a good state so that potential buyers are impressed when looking around. Make sure you’ve done a deep clean and taken care of small repairs around the home before showing it to people.

If there’s mess, dirt, or damage, buyers will just see it as extra work they’ll need to do when they move in. An unclean home also indicates that it hasn’t been looked after properly. From this, people are likely to assume there are other issues that they’re not aware of, making them more reluctant to make an offer.

Curb Appeal

First impressions are crucial. You want people to like your property as soon as they see it, so it needs to look good from the outside. You’ll also need good pictures of the front of your home for any listings – this is what will generate viewings, so it’s crucial.

Location

People can make changes to properties, but not the surrounding area. A dilapidated property in an ideal location will still sell (if it’s priced right).

People often prefer properties that have useful facilities close by such as schools, shops, parks, and public transport links. A great view can also make it easier to get offers.

People’s preferences vary, so there’s no single location that’s perfect. Think about the area your home is in, and be sure to highlight the best features of that location.

Marketing Strategy

In today’s world, the best place to market a home you’re selling is online. Ensure you have good photos and highlight all the best features of the property that people would be interested in. Make sure your description is accurate (even in terms of less desirable aspects) as you don’t want people to be surprised by any negative features when they come for a viewing.

Can You Avoid These Showings?

Selling your house can be hard work, and you may want to make things easier for yourself. Dealing with viewings is often time-consuming, and may be very inconvenient. As such, you might want to avoid them altogether.

Get an Offer From iBuyer.com

If you want to avoid wondering how many showings you will have before an offer, you can sell your home through a company like iBuyer.com. We’ll give you a quick cash offer, making the whole process streamlined and hassle-free.

The post No Offers? How Many Showings You Will Have Before an Offer appeared first on iBuyer Blog.

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