How Much Does it Cost to Sell a House?

Selling a house can be a fantastic experience if you buy the home below market value and are aware of all the costs involved. Selling a house can also be a disappointing experience if you are not aware of all the costs involved and do not make as much money as you had hoped to. There are many costs involved in selling a house and knowing those costs upfront will make the experience much more enjoyable. You will most likely have to pay a real estate agent, title insurance, recording and closing fees, and possibly much more when you sell a house.

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I wrote an article with many great tips here on how to sell a house for the most money. This article focuses on what costs are involved in you selling a house so that you are not surprised when you see the closing figures. I am a real estate agent and investor in Colorado so this article is based on the costs for selling a house in Colorado. Title insurance, closing fees, and other costs may vary in each state.

How much does it cost to sell a house?

The costs can vary greatly when you sell a house based on real estate commissions, closing fees, closing costs, title insurance, and more. For a rough estimate of the cost of selling a house with a real estate agent, count on 7 to 10 percent of the selling price. This figure can be quite shocking to many sellers, but if you want to get top dollar for your house, it costs money. Here is a great article on why you should always use a real estate agent to sell a house.

The biggest cost in selling a house is paying real estate agents

By far the biggest cost in selling a house is the cost to pay real estate agents. There is no set commission, but HUD pays a six percent commission: three percent to the selling agent and three percent to the listing agent. I will use HUD’s commission structure as an example throughout this article; you can always try negotiating with your real estate agent for a lower commission. A six percent commission seems like a lot of money to pay someone to sell a house, but I explain exactly why real estate agents are paid this much in this article.

I believe paying a real estate agent to sell your house is a necessary cost. The agent knows the market and is an expert at selling a house. If you do not use an agent, you could underprice or overprice your home, which could easily cost you the amount of money or more that an agent charges. An agent also knows the contract process and selling process in your state. Trying to figure out pricing, contracts, marketing, showings, negotiations, inspections, and more on your own could be a nightmare. An agent can help with all of this and make the process easier while getting you the most money for your house at the same time. Here is an article how to find a great real estate agent.

If you want to avoid paying real estate agents, you can try listing your home for sale by owner.

Title insurance is usually paid by the seller

In most states, it is customary for the seller to pay for title insurance. Title insurance is a guarantee to the buyer that a home has clear title when they buy. The title insurance guarantees that all loans are paid off and all liens, judgments, and title defects have been taken care of. It is always wise to get title insurance when you buy a home. In Colorado, it costs between $600 and $1,200 depending in the price of the home. This cost can vary by state, as some states have different laws regarding title insurance. Some sellers such as HUD do not pay title insurance.

The seller must pay closing fees, recording fees, and more

There are many other fees involved in selling a home. The closing company charges a fee to handle the closing, which can range from $200 to $800 (usually on the lower end). In some states, you must use an attorney to close on a house. In Colorado, the closing fee is typically split between the buyer and seller, but that can be negotiated as well.

There are also recording fees for the deed, recording fees for any mortgages that have to be released, wiring fees for loan pay-offs, and many banks charge to provide pay-off figures. These fees can range from $50 to $500 depending on the number of loans and pay-offs there are.

Taxes and utilities may be additional costs

When you sell a house, you pay the taxes and utilities up to the day you close in most cases. In Colorado, we have property taxes, but usually no transfer taxes or local taxes that have to be paid. Even though your mortgage company may be paying your property taxes through an escrow account, there may be taxes owed at closing. These taxes have to be paid at closing, before the house is sold and if the escrow account holds extra money, it will be returned to the seller after closing.

An escrow account is used for water bills in my area as well. The water account balance has to be brought down to zero before a house can close. The title company will typically escrow a small amount for the water bill, so that they can pay the final water after closing and any money not used will be returned to the seller.

Taxes and the water escrow can range greatly depending on the cost of a home. Colorado property taxes are low, around .05% of the sales price in my county. A water escrow may be $100. In other states, property taxes can be ten times higher than they are in Colorado.

If you lived in your home for two of the last five years as an owner occupant, you most likely will not pay any income taxes if you make money on the home. If you are selling an investment property, the taxes for gains are much more complicated.

HOA costs can be a huge surprise to sellers of a house

When you live in a neighborhood with a HOA, you usually have to pay a monthly fee. Many costs besides the monthly fee come with an HOA as well as different payment structures. I just sold a house for sellers that had a HOA, but had no monthly HOA payments. The HOA collected money by charging a .05% fee of the selling price of a home, which was split between buyer and seller on every house sold in the neighborhood. The sellers did not know this policy and were quite surprised at closing.

Most HOAs do not work this way, but many do charge transfer fees or fees for a status letter. These fees can be $20, $150, or more. The purchase contract will determine who pays these fees. The fees could be split, paid by the seller, or paid by the buyer.

What are the total direct costs when you sell a house?

Costs discussed up to this point have been direct costs when you sell a house. On a $200,000 house, the costs may be as follows:

Real estate agent commissions:     $12,000

Title insurance:                                  $1,000

HOA transfer fees:                             $150

Recording Fees, pay-off fees:           $150

Water escrow:                                    $100

Prorated taxes:                                   $750

Closing fee:                                         $200

Total:                                               $14,350

The payoff on your mortgage may surprise you at closing

The mortgage pay-off on a house you are selling surprises many people when they see how high it is. The pay-off on a mortgage is figured to the day of the sale just as the taxes are. When you receive your statement in the mail for your mortgage, the principal amount listed is calculated after you just made a payment on the loan. Every day after that principal amount is calculated by the bank, the interest increases. A $180,000 loan balance at five percent interest will accrue about $25 a day in interest. If you decide not to pay your last mortgage payment because you are closing on the 5th of the month, there could be 30 days of interest that accrue on that loan before it is paid off when you sell the house. That adds up to $750 dollars and can be a shock to sellers who expect their payoff to be the same as their last mortgage statement principal balance.

Closing costs that the buyer may ask for

In some instances, buyers may need the seller to pay closing costs in order for them to get a loan. Closing costs can range from two to four percent on a loan and many times the buyers do not have the cash to pay these costs. It is very common for the seller to pay three percent of the closing costs for the buyer; in some cases the price of the home is increased to make up for the closing costs and in other cases it is not. Closing costs are negotiable just like the price of a home, but are common. Sellers should be aware that many buyers with owner occupied financing may ask for closing costs, which will decrease the seller’s bottom line.

Fix up costs

Most people want to get the most money they can when they sell their house. The best way to get the most money is to have your home in great condition. If you have lived in a home for any amount of time, there is a good chance wear and tear has occurred. If you have kids as I do, a lot of wear and tear may occur. Most buyers want a home that will be in great shape and will not need any work when they move in. Some buyers want houses that need work, but they also expect to get a great deal when they buy those houses.

I wrote a great article on how to determine what to fix on houses that you may want to sell or rentI also have a great article on the costs to repair a home as well.


It takes a lot of money to sell a house, but remember the person you bought the house from paid those costs when they sold it to you. When you add in real estate commissions, closing costs and fees, and money to repair the home it can be a significant amount. If you are planning to use the proceeds from the sale to buy a new house, make sure you calculate the correct amounts and are not shocked when you get your figures for closing!

If you are looking for a real estate team in Colorado, check out our page here.


  1. Emmanuel September 24, 2016
    • Mark Ferguson September 26, 2016
  2. Emmanuel September 24, 2016
    • Mark Ferguson September 26, 2016
  3. John Richardson April 10, 2016
    • Mark Ferguson April 11, 2016

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