When selling your home in Indiana, it’s important to understand the various expenses involved, including closing costs. These fees cover essential services and procedures required to finalize your property sale, such as loan payoffs, property taxes, and agent commissions. In Indiana, closing costs typically include both state-specific fees and standard expenses that sellers encounter.
Our brief guide will explain some of the closing costs you might encounter in Indiana, helping you anticipate what you might need to pay when selling your home.
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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 involved in the final steps of buying or selling a property. These expenses can cover a variety of charges, such as property taxes and insurance, which are commonly encountered by both homeowners and sellers. Additionally, some fees, like transfer taxes, may differ based on the location of your property at the time of sale.
Mortgage/Loan payoff amount
The loan payoff amount is the outstanding balance on your mortgage that must be cleared before you can finalize the sale of your home. This amount includes the remaining principal balance, any accrued interest, and any additional fees that have accumulated over the duration of the loan.
When selling your home, it’s essential to ensure that the loan payoff is fully addressed to meet all the terms of your mortgage before transferring ownership.
Property taxes
According to WalletHub, Indiana ranks 21st in the country in terms of property taxes, placing it above cities like Montana and Kentucky.
Real estate in Indiana is taxed at a rate of $0.7090 (70.9 cents per $100) , with a median home value in the state of $264,000. To get a better idea of what you might owe, consult a property tax calculator.
Reconveyance fee
After the sale of your home is finalized and your mortgage is paid off, you may be required to pay a reconveyance fee. This fee is associated with the issuance of a reconveyance deed, a document that releases you from your mortgage obligation. The deed is typically recorded by your mortgage company, and the fee can vary depending 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.
Indiana, unlike most other states, does not have a transfer tax, but you will still be responsible for other closing costs when the sale is completed.
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 Indiana but may be suggested 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 Indiana is $389.
Seller’s concessions
In some cases, sellers in Indiana might find themselves owing money at closing due to financing concessions agreed upon during negotiations. These concessions can include cash for closing costs, repairs, or home warranties to assist the buyer.
A typical seller concession is repair credits, often used when a buyer includes a contingency in their offer related to a home inspection. If the seller opts not to complete the necessary repairs identified during the inspection, they may offer repair credits—funds provided to the buyer at closing to cover those costs. However, such concessions are less common in a strong seller’s market, where contingencies might deter potential buyers.
Miscellaneous closing costs/fees
These are some of the most common closing costs you’ll encounter as a seller in Indiana. However, it’s important to remember that many closing costs are negotiable. Your buyer might be open to negotiating certain costs, or a real estate agent or attorney may help you secure a better deal.
If you’d rather simplify the process, consider HomeLight’s Simple Sale program. With Simple Sale, you can sell your home in as little as 10 days by providing some basic information, speaking with one of our Home Consultants, and avoiding the complexities of working with an agent or managing closing costs.
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