✏️ Editor’s Note: Realtor Associations, agents, and MLS’ have started implementing changes related to the NAR’s $418 million settlement. While home-sellers will likely save thousands in commission, compliance and litigation risks have significantly increased for sellers throughout the nation. Learn how NAR’s settlement affects home sellers.
Average closing costs for a seller are 8% to 10% of the final sale price. However, For Sale By Owner closing costs are up to 5% or 6%. You can save up to 3% in average real estate commissions when you sell a house by yourself. Although this might seem less, it can save you thousands of dollars.
There are Flat Fee MLS companies you can list with, that will help you save the aforesaid 3% agent’s commission. Houzeo is one of the top alternatives to list your property.
What Are For Sale By Owner Closing Costs?
Listing agents usually charge a commission of 2.5% – 3%. In For Sale By Owner method, you sell your house yourself. So, For Sale By Owner closing costs refer to the expenses you incur without a listing agent’s commission.
As a result, For Sale By Owner closing costs are usually less than traditional closing costs. This is how you save more the FSBO way.
What Do You Need to Pay in For Sale By Owner Closing Costs?
Here is what you need to pay as FSBO closing costs:
Buyer’s Agent’s Commission
While you save the listing agent’s commission, you must pay the buyer’s agent’s fees. It is usually 3% or more of the final sale price, which makes it a huge chunk of closing costs.
Attorney Fees
You must hire an attorney to draft the FSBO contract and handle potential legal troubles. Their cost ranges from $150 to $500 per hour.
Home Staging
You can opt for home staging to fix the leaky faucets, improve curb appeal, or declutter the home. Home staging costs around $3,500 to $7,000.
HOA Fees
The Homeowner Association (HOA) charges $100 to $400 to update ownership records. You must also settle all unpaid HOA dues before the closing date of your home sale.
Transfer Tax Charges
State or local governments charge a non-deductible transfer tax on property sales. The cost depends on state to state.
Escrow Fee
An escrow is a third party that holds the sale amount until contract conditions are met. They typically charge 1% to 2% of the purchase price, split between buyer and seller.
Seller Concessions
You can also pay a part of the buyer’s closing cost for a faster sale. This is called a seller concession. It is always best to negotiate with the buyer what costs they want you to cover.
Property Taxes
During the home sale closing, you’ll pay property taxes for the time you have owned the home.
Title Search
A home title search looks through various records to find any claims against the property.
Owner’s Title Insurance
Owner’s title insurance ensures the buyer isn’t caught off guard by ownership issues or fake documents post-sale. It’s advisable to purchase owner’s title insurance, and it costs between 0.5% to 1% of the home selling price.
Home Inspection Fee
A home inspection uncovers any potential issue that could hinder your sale. The home inspector looks for structural, electrical, or plumbing issues. Fixing these issues can boost your chances of a sale. It costs around $400 to $500.
Home Appraisal
It’s important to know the Fair Market Value of your property when opting for FSBO. Therefore, it’s important to have a home appraisal by doing a comparative market analysis.
A home appraisal provides an unbiased, and accurate price which gives you leverage during negotiation.
How Can You Reduce FSBO Closing Costs?
You cannot avoid FSBO closing costs. However, you can reduce them by following the tips below:
- Negotiate With the Buyer: Negotiation can reduce your closing costs and increase your profit potential. Discuss what closing costs they want to pay.
- Use a Title Company: This can help you with the sale’s legal aspects, as a title company may also provide discounts on closing costs.
Houzeo as a Top Alternative
Houzeo is Flat Fee MLS listing company that helps you sell For Sale By Owner properties. Houzeo’s silver plan comes at a flat fee of $399. This way you save the 3% agent commission. Houzeo also offers great customer support at crucial stages of the transaction.
Furthermore, Houzeo’s advanced tools can help you simplify real estate transactions. One such tool is the FSBO closing cost calculator.
For Sale By Owner Closing Costs Calculator
This calculator shows you the amount of money you can save when you list your property for sale. Select the state you want to sell your home and proceed.
Bottom Line
You can save thousands of dollars with FSBO as your closing costs are reduced to 3%. However, FSBO sellers often sell for less due to their lack of MLS exposure. That’s where Houzeo comes into play!
With Houzeo, you not only save on the listing agent’s commission but your home also gets listed on the MLS. This gives a nationwide exposure to your home.
Save Big! Sell Your House with Houzeo
We’ve got you covered. Check out the following video to understand how Houzeo works and why it is one of the best For Sale By Owner websites in the U.S.
» Why Thousands of Home Sellers Prefer Houzeo: Read these exclusive Houzeo reviews and learn why it is one of the best FSBO sites in America.
Frequently Asked Questions
What are closing costs when selling a home?
Seller closing costs typically total 8% to 10% of the final sale price. However, with FSBO you have to pay 5% to 6% in closing costs because there's no listing agent commission involved.
How to avoid closing costs when selling a house?
You cannot avoid closing costs but can reduce closing costs. You have to negotiate with the buyer and using a title company offering closing cost discounts.
Who pays closing costs when selling a house by the owner?
Both the seller and the buyer divide the closing costs during the FSBO sale. The buyer covers a major chunk of the closing costs, but it varies based on negotiations.
