The seller pays for the title insurance closing cost.
A home seller has to pay for the bulk of title insurance cost. Title insurance is the policy purchased to protect the buyer from a false or hidden seller, essentially ensuring that the person selling the home is legally allowed to sell the home. Title insurance covers the passing of ownership to the buyer, and by Oregon state law, is paid for by the seller. Title insurance rates change, but a rough estimate for today is about $1350 for a $500,000 home. The price goes down if the home sales price is less and up if it is more. It is my understanding based on industry experience that this title insurance cost cannot be passed on to the buyer.
The seller pays for half of the escrow closing cost.
In addition to paying for title insurance, the seller typically pays for half of the escrow cost and the buyer pays for the other half. An example rate for today would be an $850 escrow fee to the seller for a $500,000 home. The buyer would also be paying $850, but separately. It is my understanding that the buyer could force the seller to pay for all of the escrow closing costs, but this is basically unheard of. Traditionally everyone in Oregon splits the escrow cost down the middle. Here is a current escrow formula that is subject to change = Escrow Fee is $1 per $1000 plus $1200 split 50/50 between buyer and seller. Learn more about escrow here.
The seller pays a closing cost fee to close out each lien on the home.
A mortgage is a lien, but there could be a number of other types of liens on a home. It is the seller’s responsibility to have liens removed from the home they are selling. The seller has to pay about $200 per lien to get them removed. So someone with a first and second mortgage and a home equity line on their home would pay $600 in closing costs to get all three liens released prior to close. This ensures that the buyer can receive a clean title and deed once they are transferred. Other types of liens include tax liens, mechanics liens, or judgement liens. Any existing liens on a property must be removed for the sale to be finalized.
The seller pays the local government to record the sale.
Right now the typical fee for this is $25 per tax lot. So if the seller had a home for sale that included an extra parcel it would be $50 to record the sale with the local county.
A seller in Washington County gets to pay extra closing costs.
Sorry folks, Washington County has a home sales tax they call a “transfer tax” that isn’t talked about much. The current rate is $1 per $1000 of the sale price split 50/50 between the buyer and seller. So the closing cost for the seller to Washington County for a $500,000 home would be $250.
The seller can also choose to pay the buyer’s closing costs.
Why would a seller pay for both? I wrote an entire article to answer this question here, including the risks and rewards of doing so. Sometimes it is necessary for a seller to pay closing costs because it is the only way to make the purchase financially feasible for the buyer. Other times, a buyer may accept having their closing costs paid for in lieu of repairs. This cost could be anywhere from $1 to over $10,000 – it depends solely on what the buyer and seller negotiated on the home sales contract or during inspection period negotiations. A seasoned seller’s agent can help with either type of negotiation to keep costs to a minimum.
Example Seller Closing Costs Chart
Example for $500,000 Home
Seller Pays
Title Insurance
$1350
Half of Escrow
$850
To close out one lien (mortgage)
$200
To record one tax lot as sold
$25
County recording fees (paid per page), rough estimate:
$120
Total:
$2545
If they live in Washington County
$250
Total:
$2795
Example, if the seller pays $5000 of buyer’s closing costs (Outside / Inside Washington County):
$7545 / $7795
Sellers typically pay closing costs out of their equity.
The title / escrow company pays off all the liens, prorates property taxes and insurance costs, orders title insurance, opens escrow, performs a title search to look for liens and to look for ownership, taking in the buyer’s money to purchase the home, and runs all the balance sheets for both sides. Basically the title company will subtract all of the sellers’ closing costs from their equity and give them a check or send a wire for all that remains after their liens, bills (like property taxes and HOA fees), and closing costs are paid off. This is assuming there is enough equity available in the home. If not, a seller may need to come up with the difference to close the sale.
During the closing process, carefully note any warnings from the title / escrow company about wire transfer scams. Fidelity National Title outlines some helpful warnings and instructions here. When in doubt, always check with your escrow officer.
Typically the seller pays both the seller’s and the buyer’s agent.
This comes out of the sellers’ balance sheet as well, prior to close. This depends on the terms in a listing contract. We charge a max of 4% commission to sell and back it up with a cancel anytime policy for no charge. We never charge any additional fees. The only fee is the commission if your home sells. When selling we get 1.75% commission and give 2.25% to the buyers’ agent. For a full breakdown of everything we provide and charge visit our top 1% seller’s agent page and contact us today!
I’ve been selling homes in the greater Portland metro area since 2003, and to date my team has completed over 2,000 successful home sales. We understand the past and take the time to forecast future real estate trends. If you have questions, we’re happy to help! In addition to selling your home, our top 1% buyer’s agents can assist with purchasing your new home. Call us at 503-773-0000 today!
Stephen FitzMaurice, Realtor is a top 5% real estate agent in the U.S. A Principal Broker in Oregon, Managing Broker in Washington, he has been licensed since 2003 for residential real estate sales. Call his team in Oregon at 503-714-1111 or in Washington at 360-345-3833.
