The final stage of selling a house involves the closing process, where sellers typically sign documents in advance and cover some of the closing expenses, known as “settlement fees,” to complete the transaction. Sometimes, sellers may offer concessions by covering costs that are usually the responsibility of the buyer.
Closing costs usually range from 2% to 5% of the buyer’s mortgage amount and are paid separately from the sale price, according to Fannie Mae, a leading mortgage corporation.
Common Closing Fees You Might Encounter
Excise Duties (Transfer Taxes):
These are one-time taxes imposed by state or local governments, typically calculated based on the property’s purchase price. The rates vary widely. For example, in some parts of Colorado, the rate is one cent per $100 of value, while in Florida, it’s as high as 70 cents per $100.
Fourteen states—Alaska, Idaho, Indiana, Louisiana, Kansas, Mississippi, Missouri, Montana, New Mexico, North Dakota, most counties in Oregon, Texas, Utah, and Wyoming—do not impose a statewide transfer tax, according to the Tax Foundation.
In states with fixed rates, individual counties and cities may still impose their own taxes. For instance, in Miami-Dade County, Florida, the tax rate is 60 cents per $100. Some states, like New York, apply a graduated rate based on the property’s sale price. According to the George Washington Institute of Public Policy, such variation is common.
Typically, sellers are responsible for paying transfer taxes, but these fees are negotiable.
Luxury Taxes:
In some areas, luxury homes are subject to additional taxes. For example, in Los Angeles, a $4 tax is applied to transactions over $5 million. (After June 30, 2025, the revised thresholds will be $8 million and $10 million.) In New York City, homes sold for over $2 million are taxed at 4%. Sales between $2 million and $10 million incur the same 4% rate. This policy has been in effect since 2019, according to the New York State Department of Taxation and Finance.
Insurance and Protection
Homeowners Insurance and Title Insurance:
Homeowners insurance protects against property damage. Title insurance protects your legal ownership. Buyers are often required to purchase lender’s title insurance, which protects the lender’s interest for the duration of the loan. Owner’s title insurance is optional but recommended, as it protects the buyer’s rights for as long as they own the home.
According to the American Land Title Association (ALTA), buyers typically pay for the lender’s policy, while in some areas (e.g., certain counties in Florida), sellers may pay for the owner’s policy. Title insurance and related fees usually amount to about 0.5% of the sale price—roughly $2,000 for a $400,000 home. A 2025 Urban Institute study reported these costs range from an average of $358 in Missouri to $3,496 in Pennsylvania.
The Closing Agent
The person who finalizes the transaction is usually a title or settlement company representative, or a real estate attorney. Their responsibilities include securing title insurance, preparing the deed, and recording the transaction with the courthouse. Their fee varies widely—ranging from $185 in Wyoming to $2,000 in Illinois, according to the Urban Institute.
Real Estate Taxes and Mortgage Payoff
At closing, sellers must ensure the mortgage is paid off. For example, if a home sells for $450,000 and the seller still owes $100,000, they will receive $350,000 in equity after paying closing costs. Additionally, sellers must pay property taxes up to the closing date and clear any outstanding homeowners association (HOA) dues, if applicable.
Real Estate Agent Commissions
Sellers typically cover the real estate agent’s commission and may also agree to pay the buyer’s agent fee, which usually ranges from 2% to 3% of the sale price. This often represents a significant portion of the seller’s total closing costs.
Seller Concessions
Some sellers offer concessions to make the deal more attractive. According to the National Association of Realtors (NAR), in 2024, 24% of sellers offered concessions to buyers—down from 33% the year before—due to strong buyer demand and low housing inventory.
Concessions help buyers who struggle with down payments or closing costs. However, limits exist. For example, most loans cap seller concessions at 6% of the sale price. FHA and USDA loans also cap concessions at 6%, while VA loans allow up to 4%. If the buyer makes a down payment over 6%, greater concessions may be possible.
According to NAR, seller concessions can be used to cover mortgage origination fees, home warranties, or repairs/replacements for systems like heating and air conditioning in the first year of homeownership.
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