Closing Costs in Minnesota: A Guide for Sellers

Reconveyance fee

After you’ve completed the sale of your home and your mortgage has been paid off, you’ll typically be responsible for a reconveyance fee. This fee covers the process of receiving a reconveyance deed, which officially releases you from the mortgage debt. Your lender will handle the recording of the deed, and the cost of the reconveyance fee can vary based on your city, state, or county.

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 Minnesota, for example, the seller is typically responsible for covering transfer taxes as part of the closing costs. For homes sold over $3,000, the sale is taxed at a rate of 0.33% of the total value considered. For homes sold under $3,000, the property is taxed at a flat rate of $1.65.

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 required for closing in Minnesota but it might be worth consulting one regardless. Real estate transactions are often complex, especially when considering the pros and cons of for sale by owner. A real estate attorney can help wade through the red tape.

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 Minnesota is $381.

Seller’s concessions

Sellers may find themselves owing money at closing due to financing concessions agreed upon during negotiations. These concessions often cover things like cash for closing costs, repairs, or home warranties.

A common seller concession is repair credits, often utilized when a buyer includes a contingency related to the home inspection. If the inspection uncovers issues, buyers may have the option to back out of the deal with their earnest money intact if the seller declines to make the necessary repairs.

To keep the deal moving, sellers may offer repair credits—cash at closing to cover the costs of fixing the identified issues—instead of handling the repairs themselves. However, these concessions tend to be less frequent in seller’s markets, as contingencies might deter potential buyers.

Miscellaneous closing costs/fees

These are some of the most typical closing costs you’ll encounter as a seller in Minnesota.

However, it’s important to keep in mind that many of these costs can be negotiated. Your buyer might be open to covering a portion of the closing costs, or a real estate attorney or agent may be able to help you secure a more favorable deal.

If you’d rather skip the complexities of working with an agent or managing closing costs, consider HomeLight’s Simple Sale program. Selling your home is made easy in just three steps: enter basic details about your property, speak with one of our Home Consultants, and you could sell your home in as little as 10 days.

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