Selling a Home in Arizona? Here are the Closing Costs You’ll Pay

Arizona sellers will cover these closing costs

Although there’s room for negotiations between buyers and sellers for some closing costs, sellers can’t avoid responsibility for the following:

1. Mortgage payoff

Though highly variable, one of the biggest ticket expenses for sellers at closing is the mortgage balance payoff. Nationally, the median homeownership length in the U.S. is 15 years, according to the National Association of Realtors (NAR). This means many sellers would still have a long way to go in paying off a 30-year mortgage.

Arizona is among the short-tenure states, where homeowners stay for five years or less. With such a large proportion of home sellers still in the midst of long home loan terms, chances are you’ll have to pay the remainder of your mortgage at closing.

Be sure to refer to your net sheet for the amount you’ll owe and plan finances accordingly. The goal, of course, is to sell your home for higher than your remaining mortgage balance, so you’ll have some cash in hand at the end of the transaction.

2. Property taxes

Another closing expense you won’t be spared as a seller is taxes. In Arizona, property taxes are determined by the assessed value, not the purchase price, which is established by the assessor for a given county every two years.

“It doesn’t go up very much per year,” Wexler explains. “We have very stable rates.”

Arizona property taxes are paid twice per year in advance. For sellers, this means you’ll likely pay at least a portion of that six-month tax share, and then you may get a credit back depending on the timing of the cycle. Buyers and sellers don’t negotiate tax payments in Arizona, Wexler says.

On average, the state’s property taxes are about 0.72% of the home’s value, though it varies by county. Thus, the median annual property tax payment for an Arizona home with a median value of $430,500 is $3,100 annually.

3. Loan reconveyance fee

To complete your mortgage payoff, you’ll need to pay for a reconveyance deed to furnish proof that the loan was paid off and your lender no longer has a claim to the property. The lender will generally charge a reconveyance fee of between $50 and $65 for the documentation.

4. Reconveyance recording fee

This item shouldn’t break the bank, but it’s an essential expense to pay in order to get the county to file the reconveyance deed in its records. The fee varies by Arizona county. For example, in Maricopa County, there’s a flat recording fee of $30 per document.

5. Transfer fee

In Arizona, sellers are off the hook for the transfer tax levied in many other states. Also known as doc stamps, the tax is generally imposed on the seller and can add a couple thousand extra dollars to your closing bill.

However, in 2008 Arizona voters amended the Constitution to do away with the transfer tax, becoming one of 13 states that lacks the tax item. Instead, sellers have to pay a small $2 flat transfer fee for the transaction.

6. Real estate agent commission

It’s abundantly common for home sellers to work with a real estate agent, with 90% choosing to do so in 2024. Traditionally, agent commissions have been 6% of the home’s sale price, split evenly between the listing agent and the buyer’s agent, with sellers typically covering the total cost.

However, after the recent landmark NAR settlement, these fees have been decoupled, requiring buyers to negotiate directly with their agents. Despite this shift, some sellers still choose to cover the buyer’s agent fee to attract more buyers and speed up the sale.

For context, if you’re selling a median-priced home in Arizona valued at $430,500, you’d pay around $12,915 (3%) for your listing agent’s commission. If you also cover the buyer’s agent fee, your total commission expenses could rise to $25,830 (6%). For a closer approximation of what you’ll pay based on your location, use our handy agent commission calculator.

Although Wexler says the average commission rate has dropped a bit due to heightened market competition, it’s still one of the more significant closing costs for sellers. However, shopping around for an agent with the lowest fee isn’t always advisable.

Hiring an experienced agent is one of the most important steps in selling your home and can help you seal the deal at a higher sale price. The top 5% of real estate agents sell homes for as much as 10% more than the average agent.

7. Title guarantee

To determine a property’s history, such as whether a third-party may have an ownership claim or there’s an issue such as a lien from past unpaid home improvement projects or unpaid taxes, a title company will perform a title search to determine that your home is clear for a sale to take place.

While the search fee, on average, costs between $75 and $200, sellers are also generally responsible for the title policy, which Wexler says can run between $1,400 and $4,000, depending on the age of the house and the purchase price.

While owner’s title insurance isn’t mandatory in Arizona, it’s customary and strongly advised as it protects a homeowner’s claim on their property should any third-party claims arise after closing.

8. Escrow fee

The escrow fee, also referred to as the settlement fee, isn’t an expense that sellers can completely avoid, although Wexler explains that buyers and sellers will usually split the bill equally. The fee is paid at the end of the escrow period when all the final documents are signed and the transfer of the property takes place.

For everything to be finalized, the fee must be paid and, according to Wexler, typically runs about $1,500. Since it’s split 50/50, the seller would be responsible for about $750.

Sellers may also cover these closing costs

We’re now out of the realm of standard closing costs for sellers and into the arena of expenses that may or may not be at play in your home sale process. The fees below may be additional items on your net sheet. While some of them vary from property to property, others are up for negotiation between buyers and sellers.

Whether you’re selling your home in a buyer’s market or seller’s market could mean the difference in considerable expenses or savings on your settlement tab.

Concessions

When a property goes under a sale contract, buyers usually have an inspection period during which they can hire professionals to inspect the structure for defects and pest infestations or get a surveyor to make sure the stated boundaries of the property are accurate. During this time, the buyer can opt to cancel the contract and have their deposit refunded.

However, what often happens is that the inspection process reveals repairs that need to be made. The buyer can either request that the seller have the repairs made or can ask for concessions in the form of a credit the seller pays in lieu of making the repairs.

For example, if the inspection reveals drainage issues on the property that may have caused water damage, the seller may add a $5,000 concession to the buyer so that a drain can be added or the grading adjusted.

Concessions are very market-dependent, and Wexler says that in a seller’s market, Arizona buyers aren’t getting much in the way of concessions right now. However, home sales on the higher end of the price spectrum or properties in need of significant repairs could warrant concessions from sellers.

Home warranty payment

One optional item Wexler sees sellers sometimes pay for is a home warranty. Even if all the necessary repairs and upgrades are made to a home before it is put up for sale, things still go wrong in the real world.

Whether a home is newly built or decades old, wear and tear are a natural progression and can be accelerated by the hot, dry temperatures typical in Arizona, and the intense precipitation during the monsoon season.

Home warranties grant buyers some protection against the unexpected, such as appliances failing or HVAC systems breaking down. A seller will sometimes pay for a yearlong home warranty policy, which generally ranges between $300 and $600.

Homeowners association (HOA) and condo dues

As there are about 10,100 HOAs in the Grand Canyon State and roughly 2.249 million Arizonans live in communities governed by HOAs, there’s a fair chance that your home belongs to a homeowner’s association. If that’s the case, then be prepared to pay the association any remaining dues you owe, as well as an HOA disclosure fee and transfer fee.

Disclosure fees pertain to expenses incurred by the HOA to furnish documentation to the buyer. The disclosure and transfer fees are capped at $400.

Attorney fees

“Attorneys aren’t generally used in Arizona though you’re not prevented,” says Wexler.

While it’s permissible to hire an attorney for the transaction, it’s rare in Arizona. However, complex transactions or sellers going through a divorce could warrant the expertise of an attorney.

Estimate your net proceeds after closing

Regardless of where your Arizona property is located, you can use HomeLight’s Net Proceeds Calculator to estimate your closing costs and, ideally, your net profit.

Even if you have a rough estimate of your costs, the calculator can help you get a better projection of your net proceeds so you can prepare in advance for discretionary spending or home improvement and staging.

Although Wexler meets a fair number of sellers who have a good sense of what their closing costs will be, he says that those seeking greater clarity can request a net sheet from the title and escrow company at the start of the process. This document outlines how much the house could sell for, how much you may spend, and what you’ll have in your pocket after the sale.

Read the settlement statement

The final step in closing the deal is to review your settlement statement carefully. The statement shows the details of all the monetary figures associated with the transaction, including all the fees you’ve paid, credits, and your net profit.

Go through each line of the document to make sure everything is accurate. If something doesn’t look right, this is your chance to report any errors to your agent or title company.

If you want expert guidance on navigating finances on your home sale and understanding how much you’ll spend and what you’ll take home, team up with a top agent. With these professionals, you can boost your profits and close the deal confidently.

Header Image Source: (Juan Esteban Garcia / Unsplash)