Transaction Coordination

Closing Costs for Sellers: What Sellers Pay and Who Pays What

The costs that come out of a seller's proceeds, from commission and transfer taxes to the payoff, prorations and title and escrow fees, with a who-usually-pays table built from state sources and the contract.

Ijharul Islam October 30, 2026 11 min read

Closing costs for sellers, in short: the seller usually pays their listing broker (fully negotiable since the 2024 NAR settlement), any transfer tax local law puts on them, the mortgage payoff and lien releases, prorated taxes and dues through closing, and their share of title and escrow fees. State custom and the contract decide the split.

More on this topic: Contract to close: process and checklists, every guide in one place.

Most of these come out of the seller's proceeds at closing rather than being paid in cash. Below is what each item is, a who-usually-pays table with sourced state examples, and how to estimate the net. We don't quote national percentages: commissions are negotiated and the rest depends on the state, the price and the contract. For the seller's to-do list, see the seller closing checklist; for the buyer's side, see cash to close vs closing costs.

Key takeaways

The biggest items are usually broker compensation, the mortgage payoff and, where it applies, transfer tax.
Since August 17, 2024, offers of buyer-broker compensation can't be made on the MLS, but sellers can still offer them off the MLS or offer buyer concessions.
Transfer tax is local: New York's base tax falls on the seller by law; Pennsylvania's 1% state tax plus local tax is usually split in Philadelphia, by custom.
Prorations credit or charge each side for taxes and dues through the closing date.
The settlement agent must give the seller their Closing Disclosure no later than the day of closing.

What closing costs does a seller pay?

Depending on the state and the contract, a seller's settlement statement can include:

Broker compensation: the listing broker's fee, and any contribution the seller agreed to make toward the buyer's broker.
Mortgage payoff and lien releases: the loan balance and interest to the payoff date, plus releases of any other liens and their recording fees.
Transfer or documentary taxes where the state, county or city imposes them on the seller or by custom.
Title and escrow: the owner's title policy where the seller pays it, and the seller's share of escrow or settlement fees.
Prorations: credits to the buyer for property taxes, HOA dues or rent covering the seller's period.
HOA charges: the resale package, transfer fees and any unpaid assessments. See HOA resale certificates.
Concessions and credits: anything agreed for the buyer's closing costs or repairs.
Other items: deed preparation, tax certificates, attorney fees, a home warranty if offered, and withholding when the seller is a foreign person.

Who pays closing costs, buyer or seller?

Both do, for different items, and the split changes by state. This table shows the usual pattern with sourced examples; the executed contract always controls.

Item	Usually paid by	Sourced examples and caveats
Listing broker compensation	Seller	Under the listing agreement; NAR says compensation is fully negotiable
Buyer's broker compensation	Buyer, under the buyer agreement	The seller may agree to contribute; TREC 20-19 Paragraph 12B has a box for it
Owner's title policy	Varies	Texas: a contract checkbox (TREC 20-19, 6A). California: local custom, seller usually in Southern California (CDI)
Lender's title policy	Buyer	A loan cost; buyer's expense in TREC 20-19, 12A(2)
Escrow or settlement fee	Often split	One-half each by default in TREC 20-19, 12A; other states differ
Transfer tax	Varies	New York: seller (grantor) by law. Philadelphia: usually split evenly, not legally required
Mortgage payoff, lien releases	Seller	Seller's expense in TREC 20-19, 12A(1)
Deed preparation, tax certificates	Seller	Seller's expense in TREC 20-19, 12A(1)
Recording the deed and new loan	Buyer	Buyer's expense in TREC 20-19, 12A(2)
Property taxes and dues	Prorated	Through the closing date in TREC 20-19, Paragraph 13
HOA resale certificate	Varies	Virginia and California statutes put it on the seller; the Texas addendum lets the parties choose
Appraisal, loan fees	Buyer	Buyer's expenses in TREC 20-19, 12A(2), unless the seller agrees to a concession

If you work in more than one state, keep a short local-custom note per county from the title or escrow officer, and still read every contract.

How did the 2024 NAR settlement change seller commission costs?

NAR's summary of the settlement says the practice changes took effect on August 17, 2024. Offers of compensation to buyer brokers are no longer allowed on MLS platforms, but sellers can still offer compensation off the MLS, and can offer buyer concessions on the MLS, such as help with the buyer's closing costs. Buyers working with an MLS agent need a written agreement before touring, which must state that fees are fully negotiable and not set by law.

For the seller's closing costs this means two separate questions: what the seller owes their own listing broker, and whether the seller agreed to pay anything toward the buyer's broker. The Texas resale contract handles the second in Paragraph 12B, which says brokerage compensation “is not set by law and is fully negotiable” and lets the seller contribute a stated amount or percentage. A quick way to see the dollar effect of any agreed rate is the real estate commission calculator; how the broker then divides it is covered in commission split structures.

Do sellers pay transfer taxes?

Often, but it depends entirely on where the property is. Three examples from the taxing authorities:

New York State: the real estate transfer tax is $2 for each $500 of consideration. The seller (grantor) pays; if the seller doesn't or is exempt, the buyer must. A separate 1% “mansion tax” on residences of $1 million or more is paid by the buyer, and New York City transfers carry additional taxes.
Pennsylvania: the state realty transfer tax is 1% of the value of the real estate, often collected with an additional local transfer tax; the Recorders of Deeds remit the state's 1%.
Philadelphia: the city's rate plus the state's is 4.578% in total, and the city says the tax is usually split evenly between buyer and seller, but that this isn't a legal requirement.

Other states and localities set their own rates, exemptions and payers. Ask the closing agent for the local figure early, because on a high-priced sale it can be one of the largest lines.

How is the seller's mortgage paid off at closing?

The closing agent orders a payoff statement from the seller's servicer, which under Regulation Z must send an accurate statement of the amount needed to pay the loan in full as of a specified date within seven business days of a written request. The payoff is wired from the sale proceeds at closing, and the lender then releases its lien.

Because the payoff is figured to a date, a closing that moves can change it. If the deal closes later than planned, ask for an updated payoff. If the proceeds won't cover the payoff and costs, the seller has to bring money to closing or arrange something with the lender before closing day, so run the numbers early.

How do property tax and HOA prorations work for sellers?

A proration divides a bill between buyer and seller by the days each owns the property. The Texas resale contract prorates current-year taxes, interest, rents and regular association dues through the closing date (Paragraph 13), and says the parties adjust later if the actual tax bill differs from the estimate.

If the seller hasn't paid the current year's taxes yet, the seller's share usually shows as a credit to the buyer, who pays the bill when it's due. If the seller prepaid, the buyer reimburses the seller for the days after closing. Dues work the same way. A hypothetical example: with an annual tax bill of $7,300 not yet paid and a closing on day 120 of the year, the seller's share is about 120 ÷ 365 × $7,300 = $2,400, credited to the buyer. The free property tax proration calculator does the arithmetic from the annual bill and closing date, using your local convention.

What are seller concessions, and how much can a seller pay?

A seller concession is money the seller agrees to pay toward the buyer's costs, usually negotiated after the inspection or to make an offer work. The Texas resale contract has a blank for it: an amount not to exceed a stated figure, applied to the buyer's expenses other than brokerage compensation (Paragraph 12A(1)(b)).

The buyer's loan program caps how much the seller can pay. For Fannie Mae loans, interested party contributions toward closing costs are limited by occupancy and loan-to-value:

Occupancy	LTV/CLTV	Maximum contribution
Principal residence or second home	Over 90%	3%
Principal residence or second home	75.01% to 90%	6%
Principal residence or second home	75% or less	9%
Investment property	All	2%

FHA, VA and USDA loans have their own limits, so confirm with the buyer's lender. The seller concessions limit calculator checks an agreed credit against these caps.

What else can come out of the seller's proceeds?

FIRPTA withholding: when the seller is a foreign person, the IRS says the buyer generally must withhold 15% of the amount realized. A seller who isn't foreign signs a certification of non-foreign status instead.
Liens and judgments the title search finds, which must be paid or released to give clear title.
Unpaid HOA assessments, fines and transfer fees shown on the resale certificate or estoppel letter.
Repair credits agreed after the inspection.

Two tax items aren't closing costs but affect what the seller keeps. The settlement agent usually reports the sale to the IRS on Form 1099-S. And the IRS lets a seller exclude up to $250,000 of gain on a main home ($500,000 for most joint filers) if they owned and lived in it for two of the five years before the sale. The home sale capital gains calculator gives a rough estimate; a tax adviser gives the answer.

How do sellers estimate net proceeds?

Start with the price, subtract the payoff, broker compensation, transfer tax, the seller's title and escrow share, concessions and repair credits, then add or subtract prorations. The seller net sheet calculator does this in a minute and is a good first look at listing time and again when an offer comes in.

The final numbers come from the closing agent. Under Regulation Z the settlement agent must give the seller a Closing Disclosure reflecting the seller's side of the transaction no later than the day of consummation; many closings also use a separate settlement statement. Before signing, check the price, credits, prorations, payoff and every fee against the contract and amendments, and have the seller confirm payout instructions by phone, never from an email. Our wire fraud checklist covers why.

Frequently asked questions

Do sellers have to bring money to closing?

Usually not, because their costs come out of the proceeds. A seller brings funds only when the proceeds don't cover the payoff and costs, for example after a price drop or with little equity.

Does the seller pay the buyer's closing costs?

Only if they agree to. A seller concession is negotiated in the contract or an amendment, and the buyer's loan program limits how much the seller can contribute.

Who pays the HOA transfer fee, buyer or seller?

It depends on the statute and the contract. The Texas POA addendum has the buyer pay association transfer charges up to a stated cap, with the seller paying any excess; Virginia lets the association charge the purchaser a post-closing fee.

Does the seller pay for the appraisal?

Normally no. The appraisal is a loan cost, listed among the buyer's expenses in the Texas resale contract, unless the seller agrees to cover it as a concession.

When does the seller see the final closing costs?

The settlement agent must provide the seller's Closing Disclosure no later than closing day. Ask for a draft settlement statement a few days earlier so there's time to fix errors.

Are seller closing costs negotiable?

Many are: broker compensation, concessions, repairs and, where custom allows, who pays the owner's title policy or transfer tax. Taxes owed by law and the payoff aren't.

Check the seller's numbers before closing day

Closingbird reads the executed contract and fills in the price, credits and dates it finds, so you can compare them with the draft settlement statement, and document requests collect the payoff authorization, HOA contact and repair receipts with automatic reminders. Start a free trial (14-day free trial, no credit card required) or see pricing.

Sources

Checked in October 2026. Rules and prices change, and many vary by state, so confirm with the source, your state's real estate commission or your broker before you rely on them.

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