Closing Costs in Philadelphia: 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.
Are you selling your home in Philadelphia? As you prepare for this major step, you might be wondering about the closing costs. Closing costs encompass a range of fees and expenses that sellers are typically responsible for during the final stages of a real estate transaction.
These include taxes, agent commissions, and other miscellaneous charges. In our concise guide, we’ll break down the different closing costs you can expect to encounter in Philadelphia and explain what sellers typically pay, helping you feel more confident as you complete the home sale process.
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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?
When selling a property, closing costs refer to any fees you pay during the final stages of the transaction. These can range from standard charges like property taxes and insurance to location-specific expenses, such as transfer taxes. While some of these costs apply to nearly every home sale, others can fluctuate depending on your property’s location and local regulations.
Closing costs are an essential consideration when selling your home, as they help ensure a smooth transfer of ownership. In Philadelphia, understanding which fees you might be responsible for is key to a successful sale.
Mortgage/Loan payoff amount
One critical step before selling your home is settling the outstanding mortgage. The loan payoff amount refers to the remaining balance due on your mortgage, including any unpaid principal and accrued interest. This amount must be fully paid off to finalize the terms of the loan and complete the sale.
Additionally, the loan payoff amount may include extra fees such as prepayment penalties or administrative costs. It’s important to get an accurate payoff statement from your lender to ensure all terms are met before the closing.
Property taxes
According to WalletHub, Philadelphia ranks 40th in the country in terms of property taxes, placing it below cities in other states like Rhode Island.
Real estate in Pennsylvania is taxed at a rate of 1.41%, with a median home value of $312,000. To get a better idea of what you might owe, consult a property tax calculator.
Reconveyance fee
After the sale of your home is complete and your mortgage is paid off, you’ll likely be responsible for a reconveyance fee. This fee covers the issuance of a reconveyance deed, which officially releases you from the mortgage debt. Once issued, your lender will record the deed with the appropriate government office. The cost of the fee varies based on the city, county, or state where your property is located.
This step ensures that the mortgage lien is legally removed from the property, fully clearing your financial obligations related to the home sale.
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 Pennsylvania, for example, both the buyer and sellers are responsible individually for real estate transfer taxes.
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 Pennsylvania but may be advised by your real estate agent.
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 Pennsylvania is $385.
Seller’s concessions
Sellers may owe money at closing due to financing concessions agreed upon during negotiations. These concessions often cover costs like closing fees, repairs, or home warranties to help facilitate the sale.
One common seller concession is offering repair credits. This usually comes into play when a buyer includes a contingency related to the home inspection. If the inspection uncovers issues, the buyer can walk away from the deal with their earnest money if the seller refuses to make the necessary repairs.
To avoid this, sellers can offer repair credits—cash to cover repair costs—rather than addressing the issues themselves. However, in a competitive seller’s market, such concessions are less common, as contingencies may deter potential buyers.
Miscellaneous closing costs/fees
These are some of the most common closing costs you’ll face as a seller in Philadelphia. Keep in mind, however, that many of these costs are negotiable. Your buyer may be open to negotiating some fees, or a real estate agent or attorney can help you secure a more favorable arrangement.
If you prefer to avoid the complexities of working with an agent and managing closing costs, consider HomeLight’s Simple Sale program. With Simple Sale, selling your home becomes hassle-free in just three steps: provide some basic information about your home, consult with one of our Home Consultants, and you could sell your property in as little as 10 days.
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