What closing costs does the seller pay?
Commission, transfer tax, title and any buyer credit, all taken out of the sale price at closing.
Private by design. Your numbers stay on this device.
Educational estimates only. Not financial, tax, or lending advice.
How much are closing costs for the seller?
Sellers usually pay the agent commission, any transfer tax the state or county charges, often the owner's title policy, their share of the settlement fee and any credit promised to the buyer. Nothing is paid upfront. The settlement agent deducts it all from the sale price, along with the mortgage payoff, and sends you the rest.
What closing costs does a seller pay?
The commission is the big one. The rest depends on where the house is and what you agreed with the buyer.
A buyer’s closing costs mostly come from the loan. A seller’s come from the sale itself, and these are the usual ones:
- Agent commission. The rate is negotiable, and whether you also pay the buyer’s agent is something you agree in the contract.
- Transfer tax. Some states and counties charge it when a deed changes hands and some charge nothing. Who pays it depends on where you live.
- Owner’s title policy. In many areas the seller buys this policy for the buyer. In others the buyer pays for it, so check what is normal locally.
- Settlement or escrow fee. The title or escrow company charges this for running the closing, and the two sides often split it.
- Seller credit. If you agreed to put money toward the buyer’s costs, it comes off your side of the statement.
- Prorated property tax and HOA dues. You pay these for the days you owned the house. Where tax is billed in arrears, that share is a credit to the buyer.
You rarely write a check for any of this. The settlement agent takes it out of the sale price, along with your mortgage payoff, and wires you the rest.
How much are seller closing costs on a $400,000 sale?
In this example, $30,600, or 7.65% of the price, before the mortgage is paid off.
| Amount | |
|---|---|
| Agent commission (5%) | $20,000 |
| Transfer tax (0.5%) | $2,000 |
| Owner's title policy | $1,800 |
| Settlement and escrow fee, seller's share | $800 |
| Seller credit to the buyer | $6,000 |
| Total seller closing costs | $30,600 |
| Mortgage payoff, principal | $250,000 |
| Payoff interest, 20 days at $44.52 | $890 |
| Net proceeds to you | $118,510 |
The commission, transfer tax, title and settlement figures are assumptions for the example, not typical rates. Each one is negotiable or set by your state and county.
On paper this seller has $150,000 of equity, the price minus what they owe. What reaches their account is $118,510. If you are selling to buy, plan the next down payment on the second number. The affordability calculator takes the cash you will actually have.
How much can a seller credit the buyer?
The buyer's loan sets the limit.
| Buyer's loan | Limit | Most you can credit |
|---|---|---|
| Conventional, 5% down | 3% of the price | $12,000 |
| Conventional, 20% down | 6% of the price | $24,000 |
| Conventional, 25% down | 9% of the price | $36,000 |
| VA, no down payment | 4% of the loan | $16,000 |
The $6,000 credit in the example above fits under every row.
On a conventional loan for a home the buyer will live in, Fannie Mae limits what the seller can pay toward the buyer’s costs. The limit is 3% of the price (or the appraised value, if lower) when the buyer borrows more than 90% of it, 6% up to 90%, and 9% at 75% or less (Fannie Mae Selling Guide B3-4.1-02). On a VA loan, concessions are capped at 4% of the home’s reasonable value, the figure on the VA Notice of Value (VA funding fee and closing costs).
A buyer with a small down payment gets the smallest limit. If the credit you agreed goes over it, the extra has to be cut or turned into a price reduction. The closing cost calculator checks a seller credit against these limits. Switch it to Selling mode to estimate your costs, payoff and net proceeds.
Why is my mortgage payoff higher than my balance?
Mortgage interest is paid in arrears, so the payoff includes interest for the days since your last payment.
Each monthly payment covers the interest for the month before it. When you sell, the lender adds interest for every day from your last payment to the payoff date. In the example, $250,000 at 6.5% costs about $44.52 a day, so a sale on the 20th of the month adds $890 to the payoff. Some servicers count a 360-day year, which makes the daily figure a little higher. The payoff statement you or the title company order states the amount good through a set date.
If your taxes and insurance go through escrow, the money left in that account comes back to you. The servicer has to refund it within 20 days of payoff, not counting weekends and legal public holidays (Regulation X, 12 CFR 1024.34). The refund is not part of your proceeds at closing, so it arrives as a separate check or deposit.
Are seller closing costs tax deductible?
No, but they reduce the taxable gain on the sale.
The IRS treats commissions, legal fees, advertising and similar selling costs as selling expenses. You subtract them from the sale price to get the amount realized, which shrinks any taxable gain (IRS Publication 523). If you meet the ownership and use tests for a main home, you can exclude up to $250,000 of gain, or $500,000 for a married couple filing jointly. When the whole gain fits inside the exclusion, the sale may owe no tax at all. The tests have conditions, and Publication 523 works through them.