Selling a home includes a host of fees, some of which are unavoidable. Here are some of the fees and costs you’ll need to take into account when budgeting for a sale, particularly if you’re planning to buy a new home with the proceeds.

Escrow Fees

Escrow is a service provided by an organization independent of both the buyer, the seller, and their agents. The escrow officer has three main roles:

1. Holding onto all the relevant sales documents
2. Handling the money (both deposit and full payment) as it moves from buyer to seller and making sure the money gets to the right place at the right stage of the sale process
3. Handling the deed and title transfers that make the buyer the new legal owner of the property

The total escrow fees are commonly 1-2% of the sale price, but can go higher. You have two opportunities for negotiation here: negotiating the fee itself (or shopping around for a different escrow organization), or negotiating how the fee is split between the buyer and seller.

Title Fees

Title is the legal term for who is officially the owner of a property. As well as the cost of handling the title transfer itself (which is usually part of the service covered by escrow fees), a house sale usually brings about two other title-related fees.

1. A title search is a formal check of public records to confirm the seller is indeed the legal owner of the property and nobody else has any claims or liens on it (A lien is where a court gives someone else legal ownership of a property until a debt is paid, for example if the property owner has failed to pay their taxes). The cost of a title search depends on the state and how difficult it is to access the records.
2. Title insurance covers the potential legal problems and claims if it turns out there was a mistake in the title search. Title insurance requires a one-off payment rather than ongoing premiums, and it’s generally in the range ½ -1% of the property sale price. Who pays the title search and title insurance fees is usually a matter of negotiation. While the services benefit the buyer, sometimes a seller will cover the fees to make the house sale more attractive.

Taxes

Selling a property will often attract taxes, depending on your state. The most common is a transfer tax, which is usually imposed on the sale itself rather than an individual, meaning it’s up to the buyer and seller to negotiate who pays (or how to split the cost). In some places, the county and even the city may have additional transfer taxes on top of that imposed by the state. Transfer taxes are nearly always based on a percentage of the sale price, but the proportion can vary widely from as little as 0.1%-2% or more.

Some states also have a mortgage tax, though this is imposed on the mortgage borrower, so shouldn’t affect you as the seller.

In some cases, you may have to pay capital gains tax on the profit you’ve made on the property: that is, the sale price minus what you originally paid for the property. This doesn’t affect most people, as there’s a $250,000 exclusion for an individual or $500,000 for a married couple, as long as it’s been your main home for at least one year of the previous five years. This exclusion applies only to the profit, not the sale price, so it’s only usually a factor for very expensive homes.

Miscellaneous Fees

A host of other relatively small fees could arise when you sell a house, which can add up. It’s worth keeping track of such fees and checking if they seem reasonable, but sometimes the negotiation may not be worth the time and stress involved. Examples of fees a seller might have to pay include:

• Fees to a Home Owners Association to cover the transfer of membership to the buyer
• Fees to courier companies to physically move documents such as title deeds

You may also face several costs when you sell a home that aren’t strictly sale-related fees, but are still important to budget for. These include:

• Repairs and renovations to the home before you put it on the market, which boost potential sale value
• Removal costs when you empty the property after the sale

When it comes to selling your home, don’t be afraid to ask your real estate agent about the fees you might pay as a seller, including ways to negotiate with potential buyers. A great realtor will not only know which fees are relevant to your situation but be more than happy to explain them to you.