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.
When selling your Virginia home, knowing the full scope of your closing costs in Virginia is essential.
Closing costs are various fees and expenses that sellers incur while finalizing a real estate transaction.
This guide will provide insights into how closing costs function in Virginia and what sellers can expect to pay. These costs can include things like title insurance and transfer taxes.
This guide will help you better prepare for the financial aspects of selling your property and garner a strong understanding of what you’ll owe.
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What are closing costs?
Closing costs are the fees and expenses paid when finalizing the sale of your property. These costs can cover any number of items, including property taxes, insurance, and other standard fees that most homeowners and sellers encounter. Additionally, there are specific costs like transfer taxes, which can vary significantly based on the location of your property at the time of sale.
Mortgage/Loan payoff amount
When selling your home, one of the main expenses you’ll need to address is the loan payoff amount. This amount includes the remaining principal balance on your mortgage and any accrued interest over the life of the loan.
Before you can finalize the sale, this balance must be settled in full. The loan payoff amount is essentially the remaining debt on your mortgage, including any additional fees required to complete the loan terms.
Property taxes
According to WalletHub, Virginia ranks 19th in the country in terms of property taxes, placing it above cities like Georgia, which is 25th.
Real estate in Virginia is taxed at a rate of 0.76%, with a median home value of $339,800. To get a better idea of what you might owe, consult a property tax calculator.
Reconveyance fee
Once you’ve finalized the sale of your home and paid off your mortgage, you’ll usually be on the hook for a reconveyance fee. This fee is for the reconveyance deed, which releases you from your debt. Your mortgage company will record the deed, and the fee will depend on the city, state, or county where you are 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 Virginia, for example, the buyer is typically responsible for covering transfer taxes as part of the closing costs, but depending on the terms of the sales agreement, this can fall to the sellers.
The Virginia state transfer tax is levied at a rate of $0.25 cents per $100 of the portion price or fair market value of the transferred property, whichever total is greater.
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.
In Virginia, real estate attorneys are not essential for closing, but your real estate agent may advise you to work with one anyway.
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. In Virginia, the average monthly fee paid to an HOA is $392.
Seller’s concessions
Sellers might owe money at closing due to financing concessions agreed upon during negotiations. These concessions often include cash for closing costs, repairs, and home warranties. A common seller’s concession is repair credits.
This is sometimes used when a buyer has a contingency in their offer, usually related to home inspection. In that case, they can back out of the deal with earnest money intact if the seller refuses to address necessary repairs identified by the home inspector.
Instead of making the repairs themselves, sellers can offer repair credits—cash to cover the cost of needed repairs—to the buyer at closing. It’s important to note that these are less common in seller’s markets, usually because contingencies can be off-putting to potential buyers.
Miscellaneous closing costs/fees
These are some of the most common closing costs you’ll encounter as a seller in Virginia. However, it’s important to remember that many closing costs are negotiable. Your buyer may be willing to negotiate on some of these closing costs, or a real estate attorney or agent may be able to help you get a better deal.
HomeLight can connect you with a top local agent to ensure you pay for the least closing costs possible without jeopardizing your sale.
Or, if you prefer to avoid the hassle of dealing with an agent or managing closing costs, consider HomeLight’s Simple Sale program. We make selling your home easy in just three steps. Just enter some basic information about your home, speak with one of our Home Consultants, and you can sell your property in as little as 10 days.
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