When you’re getting ready to sell your Texas home, it’s important to remember some hidden costs that will be a part of your closing. As you’ll soon discover, selling a house and moving isn’t cheap. Besides paying for repairs, a listing agent, staging, and moving expenses, you’ll also be on the hook for closing costs. When you sell your home, it’s never a good feeling to find out you made less than you initially thought you would. So being prepared financially will help you know how much you’ll truly get to walk away with and put towards your next home. Below we’ll cover all you need to know about closing costs in Texas, who pays what, how much they are, and some ways you may be able to reduce the amount you pay.
Closing Costs When Selling Your House In Texas
What Are Closing Costs?
Maybe it’s been a while since you’ve bought or sold a house, but closing costs are a typical part of a housing transaction. The closing is the last and final stage of the home selling process and is when all the documentation is signed, and payments are processed. The final step is the transfer of property ownership from you to the buyer.
This process runs smoothly because third-party services- like an escrow company or title company handles the closing process and are to be compensated.
Both you, the seller, and the buyer will be responsible for an assortment of closing cost fees. As the seller, your closing costs will most likely relate to transferring ownership of your property while the buyer mainly pays closing costs associated with their lender.
How Much Are Closing Costs in Texas?
Closing costs can range from 1% to 7% of your house’s sales price; however, neither you nor the buyer will pay the full amount. Typically the seller will pay anywhere from 1% to 3%, and the buyer pays between 3% and 4% of the closing costs.
Keep in mind, even though you get to avoid the brunt of closing costs, the seller (you) will still have to cover the cost of commissions which can add up to as much as 6% of the final sale price.
Which you’re probably thinking “this is sounding expensive, how much is this going to cost?”
Doing your own closing cost estimate is easy. To estimate the cost of closing, simply multiply the price of your house by the typical closing cost percentage of 1%-3%.
For example, as of January 2021, the median sale price in Texas is $275,000. If you multiply that by the typical closing cost percentage (1% to 3%), you will find that your closing cost will range between $2,750 and $8,250.
Fees Included in Closing
So you’re probably wondering what exactly do all these fees include? Usually, these costs are divided among the buyer and seller, but who pays what is negotiable. However, it would be helpful to know what these fees include if the buyer requests you to pay a portion of their closing costs.
Here is a general idea of what closing costs consist of:
Title Search
Cost: $300 to $600
A title search is done before closing to confirm the home’s ownership history and ensure you’re the legal owner. A title search will also alert if any liens or judgments have been filed against the property.
Title Insurance
Cost: on average $1,400+
Title insurance shields the buyer from any financial loss due to issues that come up with the title search, such as outstanding liens. The title insurance fee depends on your house; for the Texas median home price of $275,000, your title insurance will cost more, around $1,815.00.
Home Inspection
Cost: $450
A home inspection is conducted before closing to assess the home’s condition and check for major structural or foundation damage issues. Costs may vary depending on the company and area of Texas.
Appraisal
Cost: $430
A home appraisal helps determine the home’s value and ensures the lender that the property is worth the amount they are loaning the buyer.
Survey
Cost: $450
Lenders typically require a property survey to determine any buildings’ location and the home’s boundaries. Costs may vary depending on your lot size and type of property.
Credit Report
Cost: $20 to $50
A credit report is pulled to check the buyer’s credit, and this fee covers the cost for the lender to get a credit history and score.
Loan Payoff
Costs: 0.5% to 1.5% of the Sales Price
Loan payoff costs include application fees, prepaid interest, and loan origination fees.
Mortgage Payoff/ Prepayment Penalty
Cost: Varies
This is the amount you still owe on your mortgage. You will need to pay off the rest of your home loan at closing, and if you pay before your mortgage term ends, you may be charged a penalty for prepayment.
Outstanding Debts Owed on the Property
Cost: Varies
You’ll be financially responsible for settling payments on your home that include HOA fees, property taxes, possible capital gains taxes, utility bills, and homeowner’s insurance. All of these fees will be prorated to your closing date.
Recording Fees
Cost: Varies by county
This covers the cost of registering the sale and transferring your property. Once the deed of transfer is recorded, it will become part of the public record.
Settlement Fee
Cost: $2 per $1,000 in Sales Price
Since Texas doesn’t require an attorney present at closing, you can avoid attorney fees; however, you’ll still need to pay a settlement fee. A settlement fee is what you would pay to the title or escrow company for their services on closing day.
Other Home Selling Costs in Texas
Depending on how you sell your home, don’t forget to calculate one of the biggest costs of selling your house: commissions.
As the seller, you will be responsible for paying all commission fees- both your agent’s commission and the buyer’s agent’s commission. Generally speaking, the standard commission rate is 6% of your property’s sale price, which is split between the two real estate agents.
For a Texas home selling at the median sales price of $275,000, with a 6% average commission in Texas, you’ll be paying $16,500 in commissions.
Even if you were to sell by owner you could still pay up to 3% in buyer commissions.
Along with agent commissions, you’ll also want to budget for any repair costs that may pop up during the inspection. The fixes could be as simple as repainting a scuffed wall or replacing a cracked tile, but depending on the extent of work found, you could be out thousands of dollars.
Don’t forget, the extra expense of selling your house doesn’t only arise at the end of the selling process. Before a buyer even sees your house, you’ll have to invest some money into home improvements and upgrades to get the home ready for open houses- like curb appeal or staging the property.
As you’re looking at all these expenses and adding things up in your head, you’ll soon realize the true cost to sell a house in Texas isn’t cheap.
How To Reduce Closing Costs
Usually, there is really no way to cut corners on paying closing costs; unless you can find a buyer that’s willing to cover them, you’ll be stuck paying your portion. However, everything is negotiable, but in most cases, it’s usually the seller who offers to help the buyer with closing costs. And here’s why- buyers are typically burdened with most expenses in a real estate transaction- from their down payment and mortgage payments to property taxes, homeowner’s insurance, and possibly HOA fees. Offering to pay for some of the buyer’s closing costs helps relieve some of the pressure and financial stress on them, making them feel more confident about finalizing the home sale.
Offering to pay closing costs has also been known to give sellers an edge, especially in a buyer’s market. Sweetening the deal by paying closing costs may be a deciding factor for the buyer to pick your property over another.
The bottom line is selling a house fast in Texas will cost you money.
But before you get too discouraged that your options are limited to reduce closing costs, you could sell your home to a local home buyer. Homebuyers can buy your house directly from you and help pay closing costs. They purchase houses as-is, so repairs, renovations, and staging aren’t necessary. And because you are working directly with them, you won’t need to hire a real estate agent, which means no commission fees- saving you several thousand dollars.
But some people have misconceptions about professional home buyers and jump to the conclusion they are all scams- which they are not. Take Four 19 Properties, for example, they are a local Texas home buying company that is family-owned and operated by a husband and wife duo. They have been in business for several years and are BBB accredited with an A+ rating.
They are always looking for win-win solutions and want to help people that need to sell. They have purchased inherited properties, pre-foreclosure properties, foreclosed properties, tax-delinquent properties, major rehab properties, and everything in between.
Their home buying process is really simple and involves getting a cash offer for your home within 24-hours and closing within 7 days: no repairs, no commissions, no closing costs.
They’ve really made selling a house hassle-free. So if you are concerned about paying closing costs, repairs, commissions, and how long it will take to sell your house in Texas, consider selling your home to Four 19 Properties instead and avoid those expenses and months of uncertainty.
Final Thoughts
When it comes to selling your home in Texas, there are so many hidden costs you’ll want to be aware of. Because it can be an overwhelming feeling to find out you need to pay for a foundation issue, a realtor’s commission, closing costs, and your moving expenses.
Wouldn’t it be nice if you could simply sell your home without these hidden expenses and move when it’s convenient for you? Well, you can if you work with Four 19 Properties! We buy houses in Fort Worth, Dallas, Arlington, Granbury, and other major areas of Texas.
Before you consider listing and pulling money out of your pocket to sell your house, talk to Four 19 Properties. You would be able to sell quickly and be better positioned financially to purchase your next home. Which we think sounds like an ideal way to sell your Texas home!