Closing Costs in Colorado: A Guide for Sellers
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
When selling a home in Colorado, understanding closing costs is important. Closing costs refer to the various fees and expenses that sellers typically incur to finalize the sale of their property. These costs include things like loan payoff amounts, real estate agent commissions, and more.
This concise guide will provide a clear overview of closing costs in Colorado, ensuring you know what to anticipate when finalizing your home sale.
Whether you’re a first-time seller or experienced in the market, this guide will help you manage the closing costs of selling a property in Colorado.
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Disclaimer: This article provides estimates of a seller’s closing costs that are meant for educational and research purposes only; our calculations are not a guarantee.
What are closing costs?
Closing costs are the fees you encounter when finalizing the sale or purchase of a property. These costs cover a broad spectrum of expenses, including standard ones like property taxes and insurance. However, some fees, such as transfer taxes, can differ based on the location of your home at the time of sale.
Mortgage/Loan payoff amount
When you’re selling your home, one important step is paying off your existing mortgage. The amount you need to pay to settle your mortgage is known as the loan payoff amount. This figure includes the remaining principal balance, as well as any interest that has accrued over the life of the loan. In addition, the loan payoff amount may also incorporate any additional fees required to finalize the terms of the loan.
Property taxes
According to WalletHub, Colorado ranks 3rd in the country regarding property taxes, placing it above states like Nevada.
In real estate in Colorado, the multi-family residential assessment rate is 6.8% for 2024, with a median home value in the state of $599,000. To get a better idea of what you might owe, consult a property tax calculator.
Reconveyance fee
After you’ve successfully sold your home and paid off your mortgage, you’ll likely need to cover a reconveyance fee. This fee is associated with the issuance of a reconveyance deed, which officially releases you from your mortgage debt. Your lender is responsible for recording this deed, and the fee amount can vary depending on the specific city, state, or county where your property is located.
Realty transfer tax
You also might be responsible for what’s known as a realty transfer tax. These are fees assessed by local governments whenever a property changes ownership.
These taxes are sometimes called a “Deed Excise tax” or a “Documentary Stamp tax.” Who ultimately pays these taxes depends on the state, city, or county where the sale occurs.
In Colorado, for example, the buyer is typically responsible for a documentary fee or transfer tax. However, the buyer and seller can agree to determine who pays what.
Real estate agent commission
Unless you’re selling your home for sale-by-owner, you’ll likely have used a local agent. Research indicates that an agent’s expertise can significantly impact your sale: In 2023, homes sold with an agent’s assistance had a median price of $405,000, compared to $310,000 for FSBO sellers.
Working with a real estate agent means paying a commission. This fee covers various services, such as accurately pricing your home, marketing it effectively, and negotiating with buyers to ensure you receive the best possible price and terms.
It should be noted, however, that on March 15, 2024, the National Association of Realtors (NAR) announced a landmark lawsuit settlement that will change the way real estate agent commissions are handled in the future. These changes will “decouple” seller and buyer agent compensation. Industry experts predict that this decoupling will likely lower agent fees and give buyers the ability to negotiate commission amounts directly. Learn more.
HomeLight’s transaction data reveals that the national average real estate agent commission is 5.8% of the property sales price. This commission typically includes fees for both the listing and buyer’s agents, with sellers customarily covering the cost.
Use HomeLight’s commission calculator by entering your city for commission data tailored to your specific area.
Attorney Fees
Some states require an attorney to be present when closing the sale of a property.
Real estate attorneys are not essential for closing in Colorado but it might be a good idea to consult one regardless.
Homeowners Association/Condo Fees
One of the biggest sticking points for sellers is the fees levied by their homeowners’ association (HOA) or condominium association fees.
Like other fees we’ve discussed, these will vary, not just because of the different rules and regulations of your local HOA but also because HOA regulations vary greatly depending on the state. These fees (or dues) are usually prorated at the time of the sale.
The average monthly HOA fee in Colorado is $401.
Seller’s concessions
In Colorado, sellers might find themselves responsible for certain expenses at closing due to financing concessions agreed upon during negotiations. These concessions can include contributions towards closing costs, repairs, or even home warranties.
A common concession sellers may encounter is offering repair credits. This typically comes into play when a buyer includes a contingency in their offer, often linked to the home inspection. If the seller declines to address the necessary repairs highlighted by the home inspector, the buyer can withdraw from the deal with their earnest money intact.
To avoid losing the sale, sellers can opt to provide repair credits—cash offered at closing to cover the cost of the repairs—instead of handling the repairs themselves. It’s important to note that these concessions are less common in a seller’s market, where contingencies might deter potential buyers.
Miscellaneous closing costs/fees
These are some of the most common closing costs you’ll face as a seller in Colorado. However, keep in mind that many of these costs can be negotiated. Your buyer might be open to discussing some of these expenses, or you could work with a top local agent or a real estate attorney to secure a better deal.
If you’d rather bypass the complexities of working with an agent or managing closing costs, HomeLight’s Simple Sale program offers a streamlined alternative. With Simple Sale, you can sell your home in just three steps: provide basic information about your property, speak with one of our Home Consultants, and complete the sale in as little as 10 days.
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