What will my closing costs be when I sell my house?

When clients are negotiating the sale of residential property, it is vital to understand prior to negotiations an esimation total closing costs will be. The closing cost figure will provide a baseline to figure out the net proceeds a client will realize after the sale. 

In Connecticut, there are four or five primary sums paid by the Seller at closing, with one not being a true closing cost.  They are:

  • Mortgage Payoff: This is the item which is not a true closing cost. This amount is the total you will owe the bank at closing. The total usually consists of your principal balance, a portion of your monthly payment due the first of the month following closing (you pay your mortgage in arrears meaning there will be interest due from the first of the month of closing through the payoff date), and any negative escrow balance. If you have a positive escrow balance it will either be credited against the payoff amount or returned to you approximately 30 days after the loan is paid in full.

  • Brokerage Commissions: This is the amount you negotiated to pay in commission with your real estate agent. The commission is typically a percentage of the gross sales price.
  • Conveyance Tax: This is the item which surprises most Sellers. The State of Connecticut and Town where the property sits are each entitled to a portion of the sales price as a conveyance tax. The State collects .75% of the first $800,000 and 1.25% on all amounts above $800,000. The Town typically receives .25% of the purcahse price, although certain cities in the State are entitled to, and do, charge higher rates. If you live in a larger municipality, you should check with your attorney to determine what the local conveyance tax rate is. The quick calculation for total conveyance tax in most towns, however, is, the total conveyance tax is 1% on all amounts up to $800,000 and 1.5% on all amounts over $800,000.
  • Attorneys' Fees: This is the fee your attorney charges to represent you in the transaction. Fees vary throughout the State but I would be prepared to pay between $1,000 and $1,500 for a typical transaction.
  • Recording charges: This is the cost to record mortgage releases, powers of attorney, or any other documents on the land records necessary to convey clear title. This may vary from $0 to $250 depending on what needs to be recorded.

You can appreciate every transaction is different so all of the charges above may not necessarily apply or there may be other closing costs incurred, depending on the circumstances of the sale. You should not hesitate to contact us if you have any questions about the costs which would be incurred in your potential sale.