How to Save on Closing Costs

How to Save on Closing Costs

The only thing worse than paying closing costs on a home as a buyer is paying closing costs on that same home as its seller. Believe it or not, when it comes to closing costs, selling is often more expensive than buying.

Whereas buyers typically pay between 2% and 5% of a property’s sale price, sellers often pay between 8% and 10%, plus additional fees and taxes. Additionally, to stay competitive in the real estate market, some sellers feel pressured to pay the buyer’s closing costs as well.

So how can a seller save a little cash, the very thing they’re trying to make by selling property in the first place? Here are some tips:

Either negotiate with your agent…

Real estate agents make commission on every house they sell. The good news is that means they’re highly motivated to help you sell your property. The bad news is that the agent’s commission comes from a percentage of that same property’s sale price. Fortunately, different agents will charge different percentages, so don’t hesitate to comparison shop or even to haggle. An agent might be willing to charge less in exchange for representing you as a seller for multiple properties or for representing you as a buyer as well.

…or forgo having any agent at all!

Virtually anything a real estate agent can do for you, you can do for yourself with a little patience, effort, and know-how. Spend some time doing market research. Get an estimate of your home’s value and set your price. Clean your house, take some pictures, and list it in local classifieds and on consumer real estate websites. Hold open houses and negotiate with buyers one-on-one. Finally, use a “seller closing costs calculator” to crunch the numbers yourself and see how much money not having an agent is saving you.

Either don’t pay the buyer’s closing costs…

This is about as simple a piece of advice as you’re likely to get: If you want to save money on your closing costs, don’t offer to pay the buyer’s closing costs. While it is a common thing many sellers do in order to entice buyers, it’s neither obligatory nor expected. Remember that you’re the seller. You’re the one with the property. You’re the one with the thing that the buyer wants. Being willing to negotiate is a good thing, but if you feel you’re being taken advantage of, it’s okay to put your foot down and say “no!”

…or raise the sale price to cover their costs!

Alternatively, if you think offering to pay the buyer’s closing costs is advantageous to you, that doesn’t mean you have to kiss that money goodbye. It’s wise to keep the endgame in mind when first setting your property’s purchase price. Whatever you would normally charge, add a little more to that to cover the closing costs for both sides. That way, everyone is happy. The buyer feels like they got a good deal by not having to pay their own closing costs, and you, the seller, avoid having those costs eat into the money you wanted to make from your property to begin with.

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