Fees and Costs of a Home Sale

Expect to pay for commissions, inspections, insurance, taxes and other items.

Many home buyers and sellers are mystified by the long list of expenses associated with buying or selling a home. Items like title insurance, recording fees and doc stamps may be especially unfamiliar to first-time buyers.

The types and amount of fees vary from one locale to the next. Who pays is determined largely through negotiation between the seller and buyer.

Here, then, is a list of the typical fees and expenses:

Home inspection: A home inspector examines the visibly accessible areas of the property and prepares a report about the physical condition of the home.

Pest-control inspection: A pest-control operator examines the property and prepares a report about the presence or absence of termites or other wood-destroying pests and any damage to the home caused by such pests.

Other inspections: Additional inspections may be obtained to determine whether the home is structurally sound or contains any environmental hazards (e.g., asbestos, lead-based paint, radon or certain types of molds), among other issues.

Homeowner's insurance: Homeowner's insurance protects the property owner from certain losses in the event of fire, theft or other specified casualties. Insurance is typically required to obtain a mortgage since the property is the lender's security against the loan.

Specialty insurance: Some homeowners elect to purchase additional insurance to protect against such risks as flooding, earthquake damage or other hazards that aren't covered by homeowner's insurance.

Homeowner association fees: A home that's located within a planned-unit development (PUD), condominium complex or other area governed by a homeowner association may be subject to dues and assessments for the upkeep and repair of common areas such as parking structures, landscaping, parks, private roads, recreational facilities and the like.

Closing agent fee: The closing agent makes sure all the documents and monies related to the home sale are properly organized, processed, notarized, handled, accounted for and disbursed. The closing agent may be a real estate attorney, title company or escrow company.

Title report: A title report is a history of the current and prior ownership of the property and any liens, encumbrances, encroachments or easements. Title reports are prepared from public and title company records.

Title insurance: Title insurance protects the lender and property owner from claims against the ownership of the property that were not disclosed in the title report. Title policies may contain endorsements to address specific risks.

Survey: A surveyor identifies the physical boundaries and characteristics of the property, including the location of any structures, wells, fences, utility easements and other items.

Recording fee: A recorder's office is a governmental authority that creates, maintains, updates and makes available official public records of property ownership.

Property tax: Many government authorities collect annual taxes and assessments against real property. These taxes may be a set amount per parcel or based on a percentage of the value of property. Government agencies may also collect fees for trash collection, road maintenance or other services.

Transfer tax: Some government authorities levy a tax when a property changes ownership. The amount typically is based on the value of the property. This tax may be called "doc stamps," a reference to postage-like stamps affixed to a deed to prove payment of the tax.

Real estate brokerage commission: This commission is paid to the real estate brokers who arranged the sale of the home. It is usually a percentage of the sales price negotiated between the seller and listing broker.

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