Do I Need Money to Sell My House?
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Homeowners looking to sell often wonder if they need money to sell their homes. A common question we hear is “how much money do I need to sell my house?” The short answer is – selling a home usually does not cost a seller anything upfront.
When you sell a home, most of the costs associated with selling a home on the front end fall on the buyer, especially if you negotiate the deal smartly. The buyer pays for the home's inspection and appraisal, which are the most two most common out of pocket fees that have to be paid before closing on the sale of the home.
That said, sellers will typically incur closing costs in the sale – especially if the home is sold on the market. However, sellers statistically also fetch a higher price on the open market for a house than they will when selling the home off-market when they use a good agent.
Key points from this article:
- No Upfront Costs for Sellers – Typically, selling a home doesn't require the seller to pay any costs upfront. Most initial costs, like home inspections and appraisals, are borne by the buyer. However, sellers often incur closing costs, especially if the home is sold on the open market.
- Closing Costs Vary by Sale Type – In an on-market sale, sellers might have to cover costs such as escrow fees, repairs, title insurance premiums, real estate agent commissions, and various other fees. In contrast, off-market sales to cash buyers like AMI usually mean the buyer covers all closing costs, but sellers remain responsible for unpaid bills secured by the home.
- Closing Costs Deducted from Sale Proceeds – Most of the closing costs can be paid from the sale proceeds, meaning sellers don't need to pay out of pocket. As long as there's enough equity in the home, sellers can cover these costs at the closing table and receive the remaining amount.
Disclaimer – The information on this page is intended for general informational purposes only and not to provide legal advice.
On-market Sale Seller Closing Costs
In a typical on-market sale, a seller will usually incur the following typical closing costs for a seller:
- One-half of the escrow fee
- Repairs, if applicable
- Paying for the title insurance premium
- Real estate agent commissions
- Any judgments, tax liens, etc. against the seller
- Home warranty (if applicable, but it's typical for a Seller to pay toward one in Texas)
- Any unpaid HOA dues
- Pro-rated property taxes if they have yet to be paid for the current calendar year
- Any past due property taxes (if applicable)
- HOA Resale Disclosure fees and HOA transfer fee (if applicable)
- Recording charges to clear all documents of record against seller
- The payoff of loans in seller's name (or existing loan balance being assumed by buyer), including interest accrued, re-conveyance fees, and pre-payment penalties
Off-market Sale Seller Closing Costs
If you're selling your home to a cash buyer like AMI, they will typically cover all of your closing costs. However, the below items are not closing costs, and are rather unpaid bills secured by the home that the seller will still be responsible for:
- Any judgments, tax liens, etc. against the seller
- Any unpaid HOA dues
- Pro-rated property taxes if they have yet to be paid for the current calendar year
- Any past due property taxes (if applicable)
- The payoff of loans in seller's name (or existing loan balance being assumed by buyer), including interest accrued, re-conveyance fees, and pre-payment penalties
In both cases, most of these costs can be paid out of the closing proceeds (except for repairs or HOA transfer fees, if applicable to the sale).
As long as you have the equity in your home to sell it and satisfy these costs at the closing table, you shouldn't need to pay any out of pocket cash to sell your home – no matter which sale method you choose. So, when and how do you get the money after selling a house?
An Example Scenario
A seller owns a home that they are selling for $200,000 on-market to someone obtaining a mortgage on March 31 of the current calendar year. The home's assessed value for property taxes is $180,000. HOA dues are $500 per year, and there is a $200 transfer fee.
- One-half of the escrow fee = $375
- The home is sold as-is and doesn't incur any repair expenses = $0
- Paying for the title insurance premium = $1,359.00
- Real estate agent commissions = 6% or $12,000
- There are no liens or judgements against the seller = $0
- Home warranty = $375
- HOA dues are current = CREDIT to the Seller for $376
- Pro-rated property taxes yet to be paid for the current calendar year at a 3% tax rate = $1,327.87
- There are no past-due property taxes = $0
- Seller is covering the HOA transfer fee = $0
- Recording charges to clear all documents of record against seller = $50
- The payoff of loans in seller's name is $106,000
The total amount for the closing costs without taking the mortgage into account is about $15,110.87. But none of these costs need are paid upfront by the seller. Instead, they come out of the proceeds of the sale. The seller owes $106,000 on the mortgage, so the total amount they need at the closing table to sell the home is $121,110.87.
The buyer is paying $200,000 for the home. $121,110.87 of that is paid out by the title company to satisfy the liens and closing costs. The seller walks away with the difference in cash – which in this scenario amounts to over $78,000.
Is it possible to sell a house without closing costs?
Closing costs will vary depending on the terms of the contract, what debts the seller has secured by the property, your mortgage balance, whether you're selling to a cash buyer or using a traditional real estate agent, and what title company is used to close the sale.
If you're looking to sell your house, and your financial situation requires you to pay as little out of pocket as possible, contact us to get a cash offer for your home. We pay the closing costs involved with the sale and don't charge any real estate commissions on the sale.