Understanding Your Home Sale: A Guide to Selling Costs

What Does it Cost to Sell a Home?

While the excitement of selling your home is undeniable, smart sellers know that understanding the various costs involved—typically ranging from 8 to 12% of your home’s sale price—is crucial for accurate financial planning and realistic expectations. When you know what to expect, you can also work to minimize your costs and walk away with more money after your sale. By understanding the services provided and fees involved with selling your home, home sellers will be better equipped to make informed decisions.

Real Estate Agent Commissions

Many sellers’ agents are compensated between 2.5% and 3.5% of the sales price, while others get paid a lower percentage. You should compare the services agents provide and the costs involved in working with an agent to decide who is best to represent you. Our compensation is lower than that of many other agents. Find out how we’re compensated.

Be aware that almost every offer on your home will include a request to compensate the buyer’s agent. You don’t have to accept these offers, of course, but if you don’t pay the buyer’s agent, the buyer will have to pay them instead. Many buyers don’t have the money to pay their agents, so they’ll move on to other homes where the sellers will cover their agent’s fees. You may end up with fewer offers or lower offers on your home. Currently, buyer agent fees often range from 2.5% to 3.5% of the home’s sales price.

Title Insurance

Title insurance is a valuable yet often misunderstood cost in a real estate transaction. Think of it as a comprehensive background check and insurance policy for your property’s legal ownership history.

The title company researches public records to ensure you have a clear, marketable title to your home, meaning there are no outstanding liens, unpaid taxes, boundary disputes, or other legal issues that could derail your sale or create problems for the buyer.

There are two types of title insurance policies: the lender’s policy (which protects the buyer’s mortgage company) and the owner’s policy (which protects the new homeowner). As a seller in Colorado, you’re likely to be responsible for purchasing the policy that covers the buyer. (In metro Denver, buyers typically pay for a policy to cover their mortgage lender.)

The cost typically ranges from 0.5% to 1.0% of your home’s sale price, though this varies. While this might seem like a significant expense, it’s a one-time fee that provides permanent protection for the buyer and peace of mind for you, ensuring your sale goes smoothly without any last-minute legal surprises that could force you to reduce your price or lose the deal entirely.

Title & Escrow Fees

In Colorado, the title company doesn’t only issue title insurance. Most often, they also handle the closing. So they print documents for buyers and sellers to sign, walk us through those documents and notarize them, and file documents with the county. They also research taxes, get HOA documents for the buyer to review and collect, hold and distribute funds. Fees for title company services vary, but the closing fee is usually split between buyer and seller, with each party paying between $200 and $250. Other fees can run between $200 and $300.

Taxes

In Colorado, taxes are paid in arrears. That means, that if you sell your home in June, the buyer will pay taxes for the entire year, even though you owned the home for half that year. The title company will debit money from your proceeds and give it back to the buyer so the buyer can pay your portion of the tax bill the following year when it’s due. Taxes vary widely and the total amount you’ll owe depends on when you sell and the tax rate where you’re selling. Look at last year’s tax bill for an idea of what you may owe.

Concessions

A seller concession is a credit you provide to the buyer at closing to help them cover some of their costs, such as closing fees, loan origination costs, or prepaid expenses, including property taxes and homeowners’ insurance. Lately, buyers are requesting concessions to help them lower their interest rates for a specified period. Concessions vary greatly.

Think of a concession as a negotiating tool that can make your home more attractive to buyers who love your property but are stretched thin on cash for closing costs. Instead of reducing your asking price, you maintain your home’s listed value while agreeing to contribute a specific dollar amount toward the buyer’s expenses.

This strategy can be particularly effective in competitive markets or when working with first-time homebuyers who may have saved for a down payment but have limited funds for the additional costs that come with closing.

Mortgage and other Debt Payoffs

The title company will pay off your mortgage before you receive funds from the sale of your home. If there are other liens on your home, such as debt incurred from a HELOC, unpaid contractors, or HOA fees that you owe, the title company will also pay those debts before you receive your funds. While these aren’t necessarily costs of selling, it’s important to understand that all debts related to the home will be paid off at or before the closing.