How To Avoid Closing Costs When Selling A House (Complete Guide)

Selling your house is a big win! But before you jump for joy, there are closing costs – kind of like the final bill after a fun night out.

Closing costs can quickly add up and eat into your profits from the sale.

Sadly, it is impossible to avoid ALL closing costs.

But you can definitely avoid some of them or reduce them!

In this post, I break down all the fees and costs you have to pay, and how to avoid closing costs when selling a house.

What Are The Closing Costs For Sellers?

Closing costs can add up to a huge chunk of your profit, ranging from 6% to 10% of the selling price!

Here's a list of what you have to pay:

• Real estate agent commissions
• Transfer taxes
• Title insurance
• Escrow and closing fees
• Prorated property taxes
• HOA fees
• Attorney's fees

The real estate agent fee is the biggest expense, around 6% of the sale price. It's split between the seller's agent and the buyer's agent.

How To Reduce Your Closing Costs

Here’s how to reduce or avoid some of closing costs when selling a house:

#1 Sell The Home Yourself (FSBO)

One of the most effective ways to avoid closing costs is to sell your home yourself, which is known as a For Sale By Owner (FSBO) transaction.

This way, you won’t need a real estate agent, and you don’t have to pay commission fees.

The fee is about 5% to 6% of the sale price which could be thousands!

However, it's important to remember that FSBO sales require a lot more work from you, like marketing the property, showing it to potential buyers, negotiating offers, and dealing with all the legal paperwork.

Also Read: can an HOA prevent me from selling my house

#2 Negotiate Agent Commission

If you decide to work with a real estate agent, consider negotiating their commission rate.

While the standard rate is around 5% - 6%, many agents are open to negotiating, especially in a competitive market or for higher-priced homes.

Even a small reduction in the commission rate can lead to big savings on closing costs.

For example, if you negotiate a 1% reduction on a $500,000 home sale, you could save $5,000 in commission fees!

#3 Get A Discount Broker Or Flat-Fee Realtor

Another option is to work with a discount broker or flat-fee realtor.

These professionals offer their services at a reduced rate, and will charge a flat fee or a lower percentage commission.

You'll not get a full range of services from these agents, but this approach can help you save on closing costs.

This can be a good option if you are comfortable handling some aspects of the sale process yourself, like hosting open houses or negotiating with buyers.

Discount brokers typically charge a flat fee, ranging from a few hundred to a few thousand dollars, regardless of the sale price.

And flat-fee realtors charge a lower percentage commission - around 1% to 2%..

#4 Sell The House For A Cash Offer

The next way to avoid closing costs is to sell the house as is to an investor or a company that buys houses directly. This can help you avoid many closing costs.

Cash sales usually wrap up faster because they don’t involve banks, and there are fewer steps to go through.

You often don’t need to worry about things like inspections, appraisals, or long negotiations.

Plus, you don't have to spend on repairs and renovations.

The offer you get might be a bit lower than what you’d get on the open market, but you save money on closing costs and can close the deal much quicker.

This can be a good option if you want to avoid the hassle of a traditional sale.

#5 Shop Around For Service Providers

Many of the other closing costs are associated with third-party services, like title companies, lawyers, and home inspectors.

Just like you compare prices when buying other things, you should do the same for these.

Title companies, escrow agents, and settlement service providers can charge different fees.

So get quotes from a few services and compare rates. You can potentially find more affordable service providers, which equals big savings on closing costs.

#6 Negotiate Closing Costs With The Buyer

Another way to save on closing costs is to ask the buyer to cover some or all of them.

You can ask them to cover property taxes, title fees, or and some settlement fees.

Also Read: Selling A House With A Tax Lien

This can be easier to do if it’s a seller’s market, where buyers are more eager to purchase your home and might be more flexible about sharing these costs.

If it’s a buyer’s market, this can be more challenging, but it’s still worth discussing.

Bring this up early in the negotiations so everyone is clear on what to expect.