A Guide to Estimated Closing Costs for Sellers in Maryland

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Selling your home is a major change and, while it’s definitely exciting to move on to a new chapter in your life, there’s a lot to learn about the process before you get started. One of the most important things that you should keep in mind is that there are several costs you’ll need to pay to finalize your sale.

Nationwide, closing costs for sellers can range from 6% and 10% of a property’s sale price. Closing Corp, a leading provider of residential real estate closing cost data, released a report in 2020 stating that the average combined closing costs for sellers and buyers in Maryland excluding agent fees are around $11,876, or approximately 3.65% of the sale price.

However, every sale is unique, and it’s difficult to project an accurate estimate without considering your specific home sale circumstances.

To help you estimate your closing costs HomeLight consulted a top area real estate agent to create this comprehensive guide on estimated closing costs for sellers in Maryland.

Maryland sellers almost always pay these closing costs

While some closing costs are negotiable, sellers are customarily on the hook for the following:

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1. Mortgage payoff

Maryland has a homeownership rate of 66.9%, and 73% of these homeowners currently have a mortgage. This means that the majority of Maryland sellers must pay off their existing mortgage before they can transfer the property title to the new buyer.

In most cases, homeowners use the proceeds of their sale to cover their outstanding loan amount and other closing costs.

2. Property taxes

In Maryland, county governments issue property tax bills in July or August each year. Lisa Sabelhaus, a top real estate agent in Clarksburg, Maryland with over 1,100 home sales under her belt, shares that payments on property taxes are due semiannually, with one payment due at the end of the year and the other at the end of July of the following year.

Maryland has an effective property tax rate of $0.106 for every $100 of your home’s value per year. However, the specific amount depends on your local government. Check here to find out the 2021 tax rates for your local government.

When you sell your home, you’ll settle upon any outstanding property taxes prorated to the day of sale. Sabelhaus assures us that, if sellers have already paid their property taxes, they’ll receive a refund for the days that they did not live in the property when they file their state tax return.

3. Title company fees

There are several fees involved in legally changing ownership of a home. In Maryland, sellers pay a title company to facilitate this process.

“Maryland is a title company state. There are a lot of closing costs that title companies will wrap into a one-time fee for sellers to pay,” Sabelhaus shares. “I like to give a high estimate to my sellers of around $900 to engage the services of a title company.”

Here’s what your title company payment covers:

Title search and recording: To ensure a home sale is legal, the parties need to verify that there are no outstanding liens or other issues with the property’s title. After completing this verification, there’s an additional fee to update government records called a recording fee.

Attorney fees: The state of Maryland requires by law that deeds and mortgages are prepared by an attorney, under the supervision of an attorney, or personally by one of the parties named on the paperwork. Title companies have attorneys who take care of this requirement.

Loan reconveyance and recording: Many mortgage companies charge a fee to close out a mortgage. Sabelhaus tells us that title company may charge an extra $60 or so to cover this service.

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4. Transfer tax

In addition to settling up on your regular property taxes, you’ll need to pay a one-time tax to both the state of Maryland and to your local government to finalize your home sale. Sabelhaus tells us that sellers and buyers customarily split the transfer taxes, but, with current market trends favoring sellers, many buyers are offering to pay transfer taxes outright to sweeten the deal.

Maryland’s transfer tax costs 0.5% of your home’s sale price. However, if the buyer is a first-time home buyer, the state lowers the fee to 0.25%. Transfer taxes for counties and municipalities vary. For instance, Baltimore City charges 1.5% of purchase price while Montgomery County charges only 1%. For a full rundown of local Maryland transfer taxes, check out this spreadsheet.

5. Real estate agent commission

Real estate agent commissions are usually the most expensive closing cost that sellers pay. Sabelhaus advises that real estate agent commissions in Maryland usually cost around 5% of the home’s sale price. This commission covers both the listing and buyer’s agents’ fees — and, yes, sellers are expected to pay for both.

While 5% might seem like a hefty price, it’s marginal compared to the benefit of teaming up with an excellent agent. Our research shows that the top 5% of real estate agents sell homes for up to 10% more than their peers, meaning that a great agent pays for their service and then some. You can find a top Maryland agent with HomeLight’s Agent Finder. Simply plug in your property details and we’ll put you in touch with three leading agents in your area.

Maryland sellers may run into these closing costs

These costs won’t always apply, but often do. Here are the main additional closing costs Maryland sellers need to know about:

6. HOA fees and condominium dues

There are 6,785 homeowner’s associations (HOAs) in Maryland as of 2020; around 25% of homeowners across the state belong to one. This means that about a quarter of sellers may owe HOA fees at the end of their sales. According to Sabelhaus, Maryland HOAs fees typically range from $60 to $150 per month while condominium dues range from $250 to $1000 on average.

If you haven’t paid for the month during which your sale takes place, you’ll pay a prorated amount on the day of sale. If you have already paid, the buyer will credit you based on the number of days they’ll own the property during the month.

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7. Liens

Sometimes, properties are used as financial instruments for debt collection. If you owe contractors, parking tickets, child support, IRS fees, or other unpaid debts, the entity you owe may take a lien out on your property, essentially claiming part of its value as repayment for their loss. A title search reveals any existing liens on your property, and you’ll need to settle them before you can sell the house.

8. Seller concessions

In some home sales, buyers may negotiate for sellers to pay a portion of their closing costs to offset the cost of necessary repairs, or to simply lower the amount of cash the buyer needs to close the sale. However, Sabelhaus shares that sellers concessions are not common in Maryland’s market lately:

“Concessions are not happening in the current market. I would say pre-2020, you would see buyers reasonably expecting 1% to 3% in closing cost assistance negotiated into the sale price. However, it’s so tight and competitive right now that concessions have pretty much just disappeared.”

Get a quick Maryland closing costs estimate

During the final stages of your sale, you’ll receive a settlement statement, a document that includes an itemized list of every cost you’re covering. However, if you want an estimate of your total closing costs before you’ve signed any paperwork, you can use HomeLight’s Net Proceeds Calculator. By looking at your property’s value, location, outstanding mortgage amount, and other key information, our calculator will give you a ballpark estimate of how much money you’ll make on your home sale.

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