10 Closing Costs in Texas Sellers Need to Know

Property taxes

Property taxes are one of the more complicated closing costs. In Texas, property taxes are paid in arrears in the state. That means that all of your taxes for the 2023 tax year will be paid in January 2024 (or January 2025 for tax year 2024).

As a result, you’ll need to factor in your share of the property taxes into your closing costs. Let’s say the property taxes on a house are $1,200 for the entire year. If you lived in the house from January to June but sold it at the end of the month, you’d be responsible for six months of property taxes, or $600. The seller is responsible for providing this credit to the buyers, so they can pay the property taxes come January.

Harrison says this can be confusing for first-time homebuyers who are used to paying rent at the beginning of the month.

“So, everything works backwards. It’s a little confusing, especially when you’ve been renting and you’re used to paying rent and staying there, paying rent and staying there,” she explains.

Additionally, property taxes can be prorated up to the day. So using the $600 January to June example, if the seller sold on July 15, they would also be responsible for paying one-half of July’s taxes, or $50.

On average, annual property taxes are 1.81% of the home’s assessed value in Texas. However, property taxes vary by county, so check with your local government or your real estate agent.

Harrison encourages Texas sellers to keep an extra copy of their closing statement, where they’ll note the credit they gave to the buyer for the property taxes. Because they won’t be the ones actually paying the property taxes come January, this is the only record they will have of the payment. It’s important to keep the record because property tax payments are usually tax-deductible, “and it’s the only place that you’re going to show you paid taxes for that year because you didn’t get the full tax bill,” Harrison explains.

Loan reconveyance fee

When you pay off your mortgage, you are responsible for paying the loan reconveyance fee, which removes the lender’s lien from the property. Lenders’ fees can vary but usually fall between $50 and $65.

Reconveyance recording fee

You’ll also have to pay to record the reconveyance at your local county office. These costs also vary between counties. For example, Dallas County charges $25 for the first page and $4 for every page thereafter, while Tarrant County charges $19 for the first page and $4 for each additional page.

Real estate agent commission

The seller is responsible for paying a commission to the real estate agents, which is on average 6% of the sales price in Texas and is typically split evenly between the buyer’s agent and the seller’s agent. That means that if your house sold for $300,000, you would pay $18,000 in commissions to the agents. To find the average commission rate for your city, try our Real Estate Agent Commission Calculator.

Title search and policy

There’s also a required title search, which confirms that the seller is the owner of the property and that the title is free of any liens or judgments that could hold up the sale.

Further, the buyer’s lender will require a title insurance policy that protects them against future claims on the property for anything that was missed in the initial search. The buyer may also opt to get their own title insurance policy.

In Texas, the cost for a title policy can range from 0.6% to 0.9% of the sale price. While this is customarily the seller’s responsibility, many buyers offer to pay it in a seller’s market, where competition is stiff. “That’s quite a savings,” Harrison says. “Then the closing costs are maybe 7% [total], quite a bit lower.”

Sellers may also cover these closing costs

When closing on a sale, sellers might also run into a few more closing costs. These costs, such as concessions, won’t apply to every home sale. Or in some instances, they are negotiable. Here are a few to keep in mind:

Concessions

A buyer might ask a seller to make a concession. Concessions are incentives for buyers, such as paying some of their closing costs or offering repair credits. In a seller’s market, concessions are increasingly rare because buyers are expected to make a strong offer to compete with others. Asking for something in return from the seller does not usually make a competitive offer.

However, if your roof is in bad shape or your HVAC system needs replacing, the buyer might ask for a credit — basically a discount on the sales price to help them afford the repairs.

Escrow fees

Your title company will most likely charge escrow fees, which go to third parties involved in the transaction. These fees are largely negotiable between the buyer and seller. You may split them evenly or one party might end up paying for all of them. Typically, they cost between 1% and 2% of the home sale price.

HOA and condominium dues

If the home you’re selling resides in a community with Home Owner Association (HOA) fees or condominium dues, you might be responsible for paying some of these before you close on the house. Similar to property taxes, you will be responsible for paying the dues for the period you occupied the house.

About 20.9% of homeowners in Texas reside in HOA communities, so there’s about a third of a chance you might cover this closing cost. HOA fees vary by community and location, but Austin residents pay an average of $400–$800 per month, and Dallas residents pay around $150 to over $500 per month.

Real estate attorney fees

While attorneys are not required at closing in Texas, you may want one in some situations. Although they are not required, attorneys almost always draft the closing documents.

“We don’t close with attorneys in Texas, we close at title companies,” Harrison explains. “But attorneys have prepared the documents. So when I say attorney fees, it’s just the document preparation.”

Estimate your net proceeds after closing costs

Want a more concrete insight into your closing costs? Plug your home details into our Net Proceeds Calculator to estimate your net proceeds after taking closing costs and home improvements into account.

You’ll receive a final tally of all closing costs

At the end of closing, you’ll receive a settlement statement. This statement details your net proceeds from the sale after accounting for closing costs, and lists each fee, cost, and credit that changed hands during the closing. You’ll also find the commission owed to the real estate agents on this statement. In Texas, title companies are responsible for creating the settlement statement.

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