What You Need to Know About Closing Costs for Home Sellers in Greater Boston and Cambridge

Selling a home is a significant event, but it comes with various expenses that can catch you off guard. Picture this: you’re at the closing table, expecting to leave with a strong profit, only to see a chunk of it consumed by fees. That’s the impact of closing costs, and if you're not ready for them, they can seriously cut into your earnings.

In this post, we’ll break down the costs sellers typically face in Greater Boston, why they exist, and how to keep more of your money when selling your home.

What Are Closing Costs?

Closing costs are the final expenses required to complete the sale of your home. They cover a range of fees from title transfers to legal charges. Typically, sellers in Greater Boston and Cambridge pay between 6% to 10% of the home’s sale price in closing costs.

Knowing these costs ahead of time can help you budget properly and avoid unexpected financial hits.

The Most Common Closing Costs for Home Sellers in Greater Boston

1. Transfer Taxes and Recording Fees

Transfer taxes are state and local fees for legally transferring ownership of your home. In Massachusetts, transfer taxes can be a significant expense.

• How much do transfer taxes cost? In Boston, they can range from 0.5% to 2% of the sale price, depending on the transaction specifics.
• Who pays these taxes? Typically, the seller covers the cost, but this can sometimes be negotiated with the buyer.

2. Title Insurance (Owner’s Policy)

Title insurance protects buyers from any ownership disputes or legal claims on the property. Although buyers usually purchase their own policy, many sellers in Boston cover the cost of an owner’s title policy as part of the deal.

• Is title insurance mandatory? It’s not, but it’s often expected in a home sale to provide peace of mind for the buyer.
• Cost: Usually 0.5% to 1% of the home’s sale price in Boston.

3. Escrow and Closing Fees

Escrow services manage funds and documents to ensure the transaction is secure. These fees also cover the final paperwork involved in transferring ownership.

• What do escrow companies do?
• Hold funds securely.
• Ensure contract terms are met before transferring money.
• How much do these fees cost? In Boston, expect to pay between $500 and $2,000, depending on the provider.

4. Prorated Property Taxes

Since property taxes are paid annually, you’ll need to pay your share up until the closing date. In Boston, property taxes can be quite high, so this is a critical cost to factor in.

• How is it calculated? The total property tax bill is split based on the number of days you owned the home that year.
• Example: If property taxes are $8,000 per year and you sell halfway through, you owe $4,000 in prorated taxes.

5. Homeowners Association (HOA) Fees

If your home belongs to an HOA, there will be additional fees at closing.

• Unpaid dues: Any outstanding HOA fees must be cleared before closing.
• Transfer fees: Some HOAs charge $200 to $1,000 to process the ownership change.

6. Attorney Fees (If Required)

Massachusetts requires a real estate attorney to review and finalize the sale of a home.

• Cost: Typically $500 to $1,500 in Boston.
• What do they do?
• Review contracts and closing documents.
• Ensure all legal aspects are covered.

How to Reduce Your Closing Costs

Closing costs can take a sizable chunk out of your home sale profits, but the good news is that there are ways to cut back on these expenses. Whether through negotiation, strategic choices, or finding cost-effective service providers, you have options to keep more money in your pocket. Here are some practical ways to lower your closing costs as a seller.

Ask the Buyer to Cover Some Costs

• In some deals, buyers agree to cover certain closing costs instead of negotiating a lower sale price.
• This works best in a seller’s market, where buyers compete for homes.

Shop Around for Service Providers

• Get multiple quotes for title insurance, escrow services, and attorneys.
• Some companies offer discounts for bundled services.

Preparing for Closing

As you approach the finish line of your home sale, there are still a few final steps to take before closing day. Proper preparation can help avoid last-minute surprises and ensure everything goes smoothly. Here’s what you need to do before handing over the keys.

1. Review the Closing Disclosure Early

• You’ll get a Closing Disclosure a few days before closing that lists all costs.
• Review it carefully to catch any unexpected charges.

2. Finalize Repairs and Paperwork

• Complete any agreed-upon repairs before closing.

Make sure liens, HOA fees, and taxes are paid to avoid delays.

Final Thoughts

Selling a home in Greater Boston and Cambridge involves more than just finding a buyer. Closing costs can add up quickly, but by understanding what to expect and planning ahead, you can protect your profit. Stay informed and consider these tips to make the process smoother.