When preparing to sell your home in the state of Texas, keep in mind some additional costs that will be a component of your closing. Trying to sell a house and moving isn’t cheap, as you’ll soon discover. You won’t have to pay any of these costs upfront though.. You’ll be responsible for closing costs in addition to repairs, a selling agent, staging, and moving expenses. This can add up to thousands of dollars. When you sell your home, it’s never a great feeling to find out you managed to make less than you expected. So being financially prepared will help you determine how much you’ll actually get to pull away with and put into your next home.
Some of the common closing costs in Texas include the loan origination fee, the appraisal fee, the home inspection fee, the title insurance policy, the escrow or closing agent fee, and the recording fee. We’ll go over everything you need to know about Texas closing costs, including who ends up paying what, how much they are, and some methods you might be able to minimize you pay.
Closing Costs Defined
Even if you haven’t bought or sold a home in a while, closing costs are a standard part of the process. The closing is the final and most important phase of the home sale process, during which all documentation is signed and payments are processed. The final step is to transfer ownership of the property from you to the buyer.
This procedure usually goes smoothly because third-party services, such as an escrow or title company, handle the closing process and are paid.
A variety of closing cost fees will be borne by you, the seller, and the buyer. Your closing costs as a seller will most likely be related to transferring ownership of your property, whereas the buyer pays the majority of closing costs connected to the lender.
What Are Typical Seller Fees in Texas
Closing costs might be anywhere between 1 percent and 7 percent of the sale price of your house. The buyer and seller will split the costs.
The buyer often pays between 3% and 4% of the closing costs, and the seller typically pays somewhere between 1% and 3%.
It is easy to come up with your own estimate of what the costs might be. Take our your calculator and multiply the purchase price of the property by 1 to 3 percent.
In Texas, for example, the median sale price in first quarter of 2021 reached $274,300. When you double the that by the classic closing cost percentage (1 percent to 3 percent), you get a range of $2,743 to $8,229 for your closing costs.
Detailed Closing Costs
These costs are typically split between the buyer and seller, but who ends up paying what, is negotiable.
However, it would be good to understand what these fees include, especially if the buyer requests that you pay part of their closing costs. In a very hot a real estate market where properties have a low days on market average, sellers may be able to get the buyer to pay all of the costs.
Here is an overall breakdown of closing costs:
Cost: Up to $200
Before closing, a title search is performed to confirm the home’s ownership history and to ensure you are the legal owner. A title search will also reveal any liens or judgments against the property. Some title companies may charge a flat rate for their services, while others may charge an hourly rate.
Title insurance is a type of insurance that protects the owner of a property from financial loss in the event that the property title is found to be invalid or otherwise unenforceable.. The title insurance fee is determined by the value of your home and rates are set by the Texas Department of Insurance.
Inspection of Home
Cost: Starts around $300-$500
A home inspection is performed before the closing to assess the home’s condition and look for significant structural or foundation damage problems. Other additional costs include the location of the home or any private wells or septic systems. Inspection costs will vary from one company to the next. It is always a good idea to get multiple bids. The cost of an inspection will vary based upon square footage and area of the country.
Who pays for the home inspection in Texas?
Typically the buyer almost always pays for the home inspection. In some cases, if the property is going to have a lot of repair costs, the seller may actually pay for an inspection.
Cost: Starting price around $350
A home appraisal helps determine the value of a home and assures the lender that the house is worth the loan amount.
A home survey typically costs between $200 and $400.
Lenders generally require a property survey to pinpoint the position of any buildings and the boundaries of the home. The cost of your lot and property type may vary. If you are a buyer and live in a city where houses are receiving multiple bids, you might make your offer more attractive by paying for the survey.
Report on Credit
Cost: $20 to $50
To check the buyer’s credit, a credit report is obtained, and this fee includes the cost for the loan company to obtain a credit record and score.
Costs: 0.5 to 1.5 percent of the selling price
Application fees, prepaid interest, and loan origination fees are all part of the loan payoff costs.
Mortgage Forgiveness/Prepayment Penalty
This is the remaining balance on your mortgage. A mortgage prepayment penalty is a fee that some lenders charge if the borrower pays off their mortgage loan early. This fee is typically a percentage of the total loan amount, and it is designed to discourage borrowers from refinancing their mortgage loan or selling their property before the loan term is up.
Defaulted Debts on the Property
The homeowner will be financially responsible for paying your home’s HOA fees, property taxes, potential capital gains taxes, energy bills, and homeowner’s insurance. All of these fees will be deducted based on the date of your closing. You won’t be on the hook for all of the property taxes, it will be pro-rated.
The cost will vary by county.
The recording fee in Texas is a fee charged by a county clerk in order to record a document related to a property transaction. This fee is typically a flat fee, but it can vary depending on the county in which the property is located.This covers the costs of registration the sale and transferring ownership of your property. The deed of transfer will become public record once it is recorded. The recording fee in Travis County is listed here; other states will have different charges.
House Settlement Fees
$2 for every $1,000 in sales price
Because Texas does not require an attorney to be present at the closing, you can avoid paying legal expenses including any attorney fees; however, you will still be required to pay a settlement fee. On closing day, you would pay a settlement fee to the title or escrow firm for their services.
Other Types of Costs in Texas
The largest closing cost is usually the loan origination fee. Remember though, that the loan origination fee is paid by the buyer.
Other common closing costs include the loan discount points, appraisal fee, title search and insurance, escrow or attorney fees, and property taxes.
Contingent on how you sell your residence, don’t forget to factor in one of the most expensive costs: commissions.
You will be responsible to pay all commission fees as the seller, including your realtor’s commission and the buyer’s agent’s commission. In general, the standard commission rate is 6% of the sale price of your property, divided equally between the two real estate agents and their brokers.
In Texas, if you sell your house with a 6% commission rate at $300,000, you will be responsible for paying $18,000 in total commissions.
Even if you sell by owner, you may have to pay up to 3% in buyer commissions.
In addition to any commission a real estate agent may earn, you should make sure you have funds for any maintenance costs that may arise during the inspection.
The repairs may be as simple as repainting a scratched wall or having to replace a broken tile, but depending on the extent of the work discovered, you could be out more money.
Don’t forget that the additional cost of selling your home does is not finish. Before a buyer even sees your house, you’ll need to invest in home improvements and upgrades to get it ready for open houses, such as curb appeal or staging.
When you add up all of these expenses, you’ll quickly realize that the real price to sell the property in Texas isn’t cheap.
How to Keep Costs Low
There is usually no way to save money on the costs to close; unless you can find a buyer that will pay them on your behalf. Remember though, this is customary in Texas.
You can always consult with an agent who has experience that can offer some better information!
Everything can be negotiated, but in most cases, the seller offers to assist the buyer with closing costs. And here’s why: buyers typically bear the brunt of the costs associated with a real estate transaction, from their nonrefundable deposit and mortgage payments to property taxes, homeowner’s insurance, and possibly HOA fees.
Offering to pay for some of the buyer’s closing costs relieves some of the tension and financial stress, making them feel confident about completing the home sale.
Agreeing to pay closing costs can also give sellers an advantage, especially in a buyer’s market. Buyers that choose to pay the seller’s closing costs, have a leg up on the competition in a seller’s market.
To summarize, selling a house quickly in Texas will cost a sum of money after totaling the fees.
But, before you become discouraged at the all of the seller closing costs, consider selling your home to a local home buyer. Homebuyers can purchase your home straight from you and assist with closing costs. They buy houses as-is, so no repairs, renovations, or staging are required. When you cut out agents, you won’t be responsible for their large commissions.
However, some individuals have preconceptions about expert home buyers.
Bodebuilders is looking for win-win situations and want to assist people who need to sell. They’ve bought inherited homes, pre-foreclosure homes, foreclosed homes, tax-delinquent homes, major rehab homes, and everything in between.
There are numerous hidden costs to listing your property in Texas that you should be aware of. Because discovering you need to pay for a foundation problem, a realtor’s commission, closing costs, and your moving fees can be overwhelming. In a hot market, sellers can get the buyers to pay all of the closing costs. A seller can keep more cash in their pocket.
Wouldn’t it be pleasant if you could merely sell your home fast and move whenever it was convenient for you without having to deal with a realtor?
Bodebuilders works in Austin, Dallas, Fort Worth, and Houston, TX. You’d be able to sell rapidly and be in a better financial position to buy your next home. Which we believe is an excellent way to sell your Texas residence!
Frequently Asked Questions
The most common closing costs in Texas are typically the loan origination fee, the appraisal fee, the title insurance policy, the escrow or closing agent’s fee, and the recording fee.
The seller might pay for the buyer’s closing costs if the buyer is unable to come up with the money on their own. Also if housing inventory is extremely high, a seller might pay a portion of the closing costs as an incentive.
No there are no tax implications you need to aware of.
There are a few ways to reduce or eliminate closing costs in Texas. One way is to negotiate with the seller to pay some or all of the costs. Another way is to choose a lender who offers a no-closing cost mortgage.
The average closing costs in Texas are typically between 2% and 5% of the loan amount.
You can use an online closing cost calculator to estimate your own closing costs in Texas.