Closing costs for sellers usually run between 6% and 10% of the sale price, and most of that comes out of your proceeds at the table rather than from your pocket. On a $400,000 home, that is roughly $24,000 to $40,000 subtracted before you see your check. The settlement statement (also called a closing disclosure) lists every line item, and the biggest ones are predictable: agent commissions, title and escrow charges, government transfer taxes, your mortgage payoff, and any credits you have agreed to give the buyer.
Agent Commissions Take the Biggest Bite
Agent commissions are the single largest cost for most sellers. The average total commission in 2025 is about 5.44%, split between the listing agent and the buyer’s agent. On a $400,000 home, that works out to roughly $21,760. The rate, services, and conditions are set in your listing agreement with your agent.
A nationwide settlement with the National Association of Realtors changed how buyer-agent compensation works starting in August 2024. Offers of buyer-agent compensation can no longer appear on MLS listings, and buyers must sign a written agreement with their own agent before touring homes. You can still offer to pay the buyer’s agent as part of the deal, but it now happens through direct negotiation instead of an automatic MLS-published offer.
That shift gives you more room to negotiate than sellers had a few years ago. Some sellers pay only their listing agent’s fee (commonly 2.5% to 3%) and leave the buyer to handle their own agent. Others still offer buyer-agent compensation to attract a wider pool of offers. Either way, the commission is deducted from your proceeds at closing and paid to the brokerages.
Transfer Taxes and Recording Fees
State and local governments charge transfer taxes (sometimes called documentary stamp or excise taxes) whenever a property changes hands. They are calculated as a rate per dollar of sale price and vary widely. Some areas charge as little as $1 per $1,000 of value; others charge $5 or more per $1,000. On a $400,000 sale, the transfer tax bill can land anywhere from a few hundred dollars to $2,000 or more.
Recording fees are a separate charge from the county clerk or registrar to update public land records with the new deed. These generally run $50 to $250 per document, depending on local fee schedules. Both transfer taxes and recording fees are non-negotiable government charges, and the deed will not be recorded (meaning the sale cannot legally close) if they go unpaid. Who pays depends on local custom and the purchase agreement, so clarify this with your agent early.
Title Insurance and Escrow Fees
In most markets, sellers pay for an owner’s title insurance policy that protects the buyer against future claims on the property, such as undiscovered liens, boundary disputes, or errors in prior deeds. The premium is a one-time charge at closing, typically 0.5% to 1% of the purchase price. For a $400,000 home, expect roughly $2,000 to $4,000. Whether this falls on the seller or buyer depends on local custom, but in many areas the seller covers it as part of delivering clear title.
Escrow fees go to the neutral third party (a title company or escrow agent) that coordinates the closing, holds funds, obtains lender payoff letters, and makes sure contract conditions are satisfied before the deed is released. These typically range from $500 to $1,500, or a small percentage of the sale price. Related charges include signing-agent or notary fees of about $75 to $200 and a wire transfer fee of $25 to $75 to send proceeds to your bank.
If the title search turns up a problem, such as an old contractor’s lien or an unpaid tax judgment, you will need to resolve it before closing. That might mean paying off the debt, negotiating a release, or filing a court action to clear title. These resolution costs come out of your proceeds and are hard to predict, which is why reviewing a preliminary title report early pays off.
Mortgage Payoff and Prorated Expenses
If you still owe money on the home, your remaining mortgage balance plus accrued interest through the closing date is paid off from the sale proceeds before anything reaches you. The lender provides a payoff statement with the exact amount calculated to the penny for the expected closing date. Most lenders also charge a reconveyance or discharge fee of about $50 to $150 to release the mortgage lien from public records.
Prepayment penalties are rare on modern mortgages but not extinct. Federal rules restrict them on qualified mortgages to the first three years of the loan, capping the penalty at 2% of the prepaid balance in the first two years and 1% in the third year. If your loan is more than three years old or is a standard qualified mortgage, you almost certainly will not face one. For a non-qualified mortgage or a loan with unusual terms, check your note before listing.
Property taxes are prorated at closing so you pay only for the days you owned the home during the current tax period. The escrow agent calculates a daily rate based on the most recent tax bill and credits the buyer for the portion of the period you occupied the property. Depending on where you are in the tax cycle, you might owe a prorated amount or receive a credit. Homeowners insurance works similarly: if you prepaid an annual premium, your insurer typically refunds the unused portion after cancellation.
Attorney, HOA, and Home Warranty Costs
About half a dozen states require an attorney to handle the closing, and in many others sellers hire one voluntarily for complicated transactions. Attorney fees for a straightforward residential closing generally fall between $500 and $2,000, higher in expensive metro areas or when title issues need legal resolution. Even where no attorney is required, having one review the settlement statement before you sign can catch costly errors.
If your property is in a homeowners association, expect an HOA transfer fee when the home changes hands. This covers preparing a status letter or estoppel certificate confirming your dues are current and disclosing any pending assessments. These fees typically run $100 to $500, sometimes more. The HOA sets the fee, so there is no room to negotiate it down.
Some sellers also buy a one-year home warranty for the buyer. A basic plan covering major systems and appliances averages $500 to $700. It is not a required closing cost, but it can make a listing more attractive and reduce post-sale disputes over appliance or system failures.
Repair Credits and Seller Concessions
After the home inspection, buyers often ask you to either fix specific problems or provide a credit at closing to cover repair costs. A credit shows up on the settlement statement as a reduction to the buyer’s closing costs, not money you hand over directly, but the effect on your proceeds is the same.
If you agree to broader seller concessions (helping with the buyer’s closing costs, for example), the buyer’s loan type caps how much you can contribute. Conventional loans limit seller-paid concessions to 3% of the sale price when the buyer puts down less than 10%, rising to 6% for down payments between 10% and 25%, and 9% above 25%. FHA loans cap seller contributions at 6%. VA loans cap them at 4% of the sale price plus reasonable loan costs. These limits exist to prevent inflated sale prices, and exceeding them can jeopardize the buyer’s financing.
Capital Gains Tax on the Profit
Capital gains tax is not technically a closing cost because it is settled on your tax return rather than at the settlement table, but it can dwarf every other expense here if you are not prepared. Most homeowners selling a primary residence owe nothing thanks to the Section 121 exclusion, which lets you exclude up to $250,000 of gain if you are single or up to $500,000 if you are married filing jointly.1Internal Revenue Service. Sale of Your Home
To qualify, you must have owned and used the home as your primary residence for at least two of the five years before the sale. Both spouses must meet the use requirement for the $500,000 joint exclusion, and you cannot have claimed the exclusion on another home sale within the previous two years.2Office of the Law Revision Counsel. 26 U.S. Code 121 – Exclusion of Gain From Sale of Principal Residence
If your gain exceeds the exclusion, or you do not qualify, the profit is taxed at long-term capital gains rates of 0%, 15%, or 20% depending on your taxable income. One commonly overlooked way to reduce your taxable gain is to raise your cost basis by adding the cost of capital improvements, such as a new roof, kitchen remodel, added bathroom, or installed central air conditioning. Keep records; those expenditures directly reduce the gain the IRS can tax.3Internal Revenue Service. Publication 523 (2025), Selling Your Home
FIRPTA Withholding for Foreign Sellers
If you are a foreign national selling U.S. real estate, a separate cost applies at closing. The buyer is required to withhold 15% of the total sale price and remit it to the IRS under the Foreign Investment in Real Property Tax Act.4Office of the Law Revision Counsel. 26 U.S. Code 1445 – Withholding of Tax on Dispositions of United States Real Property Interests On a $400,000 sale, that is $60,000 held back. The withholding is not a tax itself; it is an advance payment toward whatever capital gains tax you actually owe, and you claim any refund by filing a U.S. tax return.
A narrow exemption applies when the sale price is $300,000 or less and the buyer is an individual who plans to use the property as a residence for at least half the days it is occupied in each of the first two years after transfer.5Internal Revenue Service. Exceptions From FIRPTA Withholding Foreign sellers can also apply for a withholding certificate from the IRS to reduce the withheld amount to the expected actual tax liability, but it takes time and should be started well before closing.6Internal Revenue Service. FIRPTA Withholding
A Sample Breakdown on a $400,000 Sale
Here is a rough itemization of what a seller might pay on a $400,000 sale, assuming a standard transaction with a mortgage payoff:
- Agent commissions (5% to 5.5%): $20,000 to $22,000
- Transfer taxes and recording fees: $400 to $2,500
- Owner’s title insurance: $2,000 to $4,000
- Escrow, notary, and wire fees: $600 to $1,800
- Attorney fees (if applicable): $500 to $2,000
- HOA transfer fee (if applicable): $100 to $500
- Prorated property taxes: varies by closing date
- Repair credits or concessions: negotiated
The non-negotiable costs (transfer taxes, recording fees, title insurance, escrow fees) cluster in a relatively tight range. Where the total swings is in the negotiable categories: commissions, concessions, and repairs. Reading every line of your settlement statement before you list puts you in a stronger position to manage the one number that matters, which is the check you deposit after everything else has been subtracted.