When it comes to selling your home in Alabama, it’s important to have an idea of the closing costs you will likely incur. Closing costs in Alabama vary depending on where your home is located and how you choose to sell it. If you’re thinking about selling your home, here is a list of common closing costs in Alabama — and how you could save some money!
What Are Closing Costs?
Closing costs are the fees and expenses a seller incurs when they sell their home. Alabama closing costs typically range anywhere from 7% to 9% of the agreed sales price. Therefore, on the average home value of $167,810 in Alabama, sellers can expect to pay somewhere from $11,746 to $15,102.
Keep reading for a breakdown of common closing costs in Alabama.
Property Transfer Tax
When you sell your home, you must pay property transfer tax to the city, county, or state where your home is located. Fortunately, the real estate transfer tax rate in Alabama is one of the lowest in the country, at a rate of $0.50 per $500 of the agreed sales price. For instance, on the median home value of $167,810 in Alabama, the real estate transfer tax amount would amount to $167.81. Although this is a small amount, it is still a closing cost and should be budgeted for.
In the state of Alabama, sellers must engage an attorney to represent them in the closing process. Part of this representation includes drawing up the deed and closing documents. Typically, a real estate attorney in Alabama will charge anywhere from $600-$1,000 to close a real estate sale. Of course, this may vary depending on the attorney and nature of the deal.
A title search is vitally important, as it confirms the rightful owner of the property, as well as any liens that may be attached. A completed title search can ensure that the title can be transferred to the buyer with no outstanding liens or encumbrances. The average cost of a title search in Alabama is around $200 to $300.
If you have a mortgage on the property you’re selling, you may be required to pay a courier fee to transfer the payoff funds to the lender. Sellers should expect the courier fee to be under $100.
If your home is a condo or located in a community with a homeowners association, you’ll also have to pay an estoppel fee. The estoppel fee helps to determine the status of your account and any dues owed.
Property taxes are paid in arrears by a year, therefore any property taxes the seller might owe are pro-rated to the closing date. Of course, property taxes vary wildly, depending on where your home is located and its assessed value.
Real Estate Agent Commission
Real estate commission is by far the most significant expense most sellers incur when paying closing costs. The average real estate commission is 5% to 6%. This means that on the median home value of $167,810, sellers should expect to pay anywhere from $8390.50 to $10068.60.
One way to save money on agents’ commission is to sell your home directly to a real estate company that specializes in hassle-free cash deals. Selling your home to a real estate company can help you avoid commission costs. In fact, you can even sell your home “as-is” with no repairs needed. This means no worrying about preparing your property for the open market or having to coordinate showings. Plus, as a cash buyer, most real estate companies can close on your terms — fast! Simply put, is the ideal solution for homeowners who need to move quickly, who are downsizing, or simply don’t want to go through the hassle of putting their home on the market!