Understanding seller’s closing costs

Written by Samantha SheltonNMLS 1647301Updated October 2026

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Consult a qualified tax professional and a Michigan real estate attorney about your situation.

Seller’s closing costs are the line items subtracted from your sale price at the closing table, and industry breakdowns commonly put the total at 6% to 10% of the sale price once agent commission is included, roughly $18,000 to $30,000 on a $300,000 home. Only a slice of that is fixed by law. In Michigan, real estate transfer tax is set by statute at $3.75 per $500 of value for the state and 55 cents per $500 for the county, a combined $8.60 per $1,000, or $2,580 on that same $300,000 sale, and Michigan law puts both on the seller.

Everything else is negotiated, contractual, or driven by your own loan: commission sits in your listing agreement, title and settlement fees in your purchase agreement, prorations in the tax calendar, and your payoff in whatever your servicer quotes the day you close.

Learn what each seller closing cost line item covers, which ones Michigan statute fixes to the dollar, and which ones you can move. The arithmetic that folds these line items into a single take-home figure belongs to a seller’s net sheet; for when the money actually reaches your account, see when a seller gets money after closing. New to all of it? Start with our Selling A Home guide.

Key takeaways:

• Budget 6% to 10% of the sale price: On a $300,000 sale that’s roughly $18,000 to $30,000, and real estate commission is the single largest line on the list.
• Michigan’s statutory piece is $8.60 per $1,000: State transfer tax runs $3.75 per $500 of value and county transfer tax runs 55 cents per $500, both charged to the seller by law, totaling $2,580 on a $300,000 sale.
• Commission has no standard rate: Since August 17, 2024, offers of buyer-agent compensation are prohibited on MLSs covered by the National Association of Realtors settlement, so your largest line item is also your most negotiable one.

What are seller’s closing costs?

Seller’s closing costs are the fees, taxes, and payoffs charged against your side of the settlement statement when a home sale is finalized, and they typically total 6% to 10% of the sale price with commission included. They are not a bill you pay in advance: the closing agent deducts them from the sale price and disburses what remains, which is why sellers with equity rarely bring money to the table.

The distinction matters. A buyer’s closing costs are largely the cost of getting a loan, so they follow the loan. A seller’s are the cost of transferring the property and retiring the debt attached to it, so they follow the house, which is why a seller’s list is short but heavy. The buyer’s half of the same settlement is covered in closing costs for buyers, and the finances of selling sets them alongside the rest of your sale economics.

You will see every figure in writing first. When the buyer is financing, the settlement agent must give the seller disclosures reflecting the actual terms of the seller’s transaction no later than the day of consummation, plus corrected disclosures within 30 days if a post-closing event changes what the seller paid. The CFPB explainer on reading the closing disclosure walks the buyer’s version; yours carries the same line items.

Seller closing cost line items

Nearly every dollar on a seller’s side of the settlement statement falls into one of the ten rows below. The Michigan column reflects statute where statute controls and custom where it doesn’t, and custom is always overridable by your purchase agreement.

Three of those rows carry most of the money and most of the confusion. Here’s what each one actually is.

Real estate commission

Commission is the largest seller closing cost and the one with no fixed rate, because broker fees are fully negotiable and not set by law. What changed on August 17, 2024 is where compensation gets communicated: offers of compensation to a buyer’s agent are no longer permitted on MLSs covered by the National Association of Realtors settlement, and agents working with buyers must have a written agreement stating the compensation amount or rate before touring a home. Sellers may still offer buyer-agent compensation, but it is negotiated off-MLS. While buyer-side closing cost concessions may still be advertised on the MLS. See NAR research on commissions and transaction costs for the underlying data.

The practical takeaway: treat the listing side and the buyer side as two separate negotiations, and get both in writing before you sign the listing agreement. Whatever you agree to becomes a fixed percentage of your gross price on the settlement statement.

Transfer taxes

Michigan charges two real estate transfer taxes and puts both on the seller. The state tax is $3.75 for each $500 or fraction of $500 of the total value transferred, and the statute states plainly that the seller or grantor is liable. The county tax is 55 cents for each $500 in a county with fewer than 2,000,000 residents, with up to 75 cents authorized only at 2,000,000 or more, and it is likewise imposed on the seller or grantor. No Michigan county currently sits above that threshold, so 55 cents applies statewide.

Combined, that is $8.60 per $1,000 of sale price, about 0.86%, $2,150 on a $250,000 sale, $2,580 on $300,000, $3,870 on $450,000. The state tax is payable to the county treasurer no later than 15 days after delivery of the deed, which is why your closing agent collects it at the table.

Title insurance and settlement fees

In most Michigan transactions the seller buys the owner’s title insurance policy for the buyer, and the premium scales with the sale price. That is custom carried into the purchase agreement, not a statutory duty, and the parties may allocate it differently.

One federal limit is worth knowing, because sellers get it backwards. Under the Real Estate Settlement Procedures Act, a seller of property purchased with a federally related mortgage loan may not require, as a condition of selling, that the buyer purchase title insurance from any particular title company. A seller who does is liable to the buyer for three times all charges made for that title insurance. You may pay for the policy; you may not dictate the buyer’s provider. The American Land Title Association’s background on title insurance and settlement services covers what the policy actually does.

How do property tax prorations work at a Michigan closing?

Prorations split a bill covering a period both parties owned the house, and the Michigan wrinkle is that there are two bills a year. Summer taxes become a lien July 1 and are generally due September 14; winter taxes become a lien December 1 and are generally due February 14, unless a city charter sets different dates.

Michigan law does not set the proration split for a private sale. Your purchase agreement does. Two conventions are common (prorating from the due date of the bill, and prorating across the calendar year) and on the same closing date they can land hundreds of dollars apart. Read the proration clause before you sign, not the week of closing. HOA and condo dues work the same way. Our selling process walkthrough shows where these numbers lock.

What does your mortgage payoff actually include?

Your payoff is not your last statement balance. It is unpaid principal plus interest accrued through the day funds reach your servicer, plus any recording or release fees, plus any prepayment penalty your note allows. Interest accrues daily, so a payoff quote carries a good-through date and closing a week late changes the number.

You are entitled to that figure in writing. For consumer credit secured by a dwelling, an accurate payoff statement must generally be provided within seven business days of a written request, with a reasonable-time standard substituted when the loan is in bankruptcy or foreclosure, is a reverse or shared appreciation mortgage, or a natural disaster intervenes.

• Prepayment penalties are capped and rare: On covered transactions a penalty is permitted only on a qualified mortgage that is not higher-priced, may not run past 36 months, and may not exceed 2% of the balance prepaid in the first two years or 1% in the third. Most post-2014 mortgages have none.
• Second liens count too: A home equity loan, HELOC, or judgment lien must be paid or released to convey clear title. Order payoff statements on every lien, not just the first mortgage.
• Escrow is not a closing cost: Any remaining escrow balance is refunded by your servicer after payoff, separately from closing.

Which seller closing costs can you negotiate?

Three of the ten line items are genuinely negotiable, and they happen to be three of the four largest.

• Commission, on both sides: Broker fees are fully negotiable and not set by law. The listing-side rate and any compensation you offer a buyer’s agent are separate decisions, and both belong in writing before you list.
• Title and settlement allocation: Who pays the owner’s policy and how the settlement fee splits are contract terms, not statutory ones. Subject to the federal rule that you may not force the buyer’s choice of title insurer.
• Buyer concessions: Every dollar you put toward the buyer’s costs is negotiated. Loan programs cap what a seller may contribute, so an oversized concession is wasted money. Read seller-paid closing costs before you agree to a number at the inspection table.
• Not negotiable: State and county transfer tax, the $30-per-document recording fee, and your mortgage payoff. No counteroffer moves them. Though one Michigan exemption can erase the state tax entirely. See the Michigan section below.

What do federal antitrust officials and NAR’s survey say about commissions?

No commission rate is set by law; every commission is negotiable, and the Department of Justice treats commission levels as a competition question (statement of interest, December 19, 2025). Your listing agreement sets yours.

The National Association of Realtors 2025 Profile of Home Buyers and Sellers, released November 4, 2025 and based on a survey of transactions between July 2024 and June 2025, reported that 91% of sellers used a real estate agent and 5% of homes sold as For Sale By Owner. NAR reported a median FSBO price of $360,000 against $425,000 for agent-assisted homes. Those are medians of two different groups of houses, so the gap does not measure what an agent adds to any one price.

How to choose a real estate agent covers what to ask before you sign, and selling without a REALTOR® lists the duties a FSBO seller keeps.

How much can a seller credit toward the buyer’s closing costs?

How much of a seller credit can count depends on the buyer’s loan. For a conventional loan sold to Fannie Mae, Fannie Mae calls this help interested party contributions, counts the seller and the real estate agent among the interested parties, and caps financing concessions by occupancy and combined loan-to-value ratio, per Selling Guide section B3-4.1-02, version dated 05/07/2025. The table shows Fannie Mae’s conventional limits only; FHA, VA and USDA loans set their own limits on seller contributions.

Source: Fannie Mae Selling Guide B3-4.1-02, Interested Party Contributions (IPCs), version 05/07/2025.

The CFPB Closing Disclosure explainer says lenders are required to provide the buyer’s Closing Disclosure three business days before the scheduled closing and tells buyers to check that the Seller Credit reflects what was agreed with the seller.

Expect the credit request to come up in negotiation: in NAR’s existing-home sales report for September 2026, chief economist Lawrence Yun said higher inventory and lengthening days on market give buyers improved negotiating power, and a seller credit is one place buyers use that leverage.

Test any credit in the seller net sheet calculator before you agree to it.

What a $300,000 Michigan sale looks like line by line

Hypothetical example, not an offer. Here is the same list with numbers attached, on a $300,000 sale in Waterford with an assumed 5% total commission. There is no standard commission rate; 5% is an assumption for the arithmetic, not a benchmark.¹

Notice where the money is. Commission is 72% of that total, the two statutory taxes are 12%, and everything else is rounding. Notice also what the table stops short of: the payoff and the take-home number. Subtracting payoff and concessions from this figure is the job of a seller’s net sheet, prepared with your actual payoff quote in hand.

These line items also follow you onto your tax return, though not the way most sellers assume. Selling expenses such as commissions, advertising fees, legal fees, and transfer taxes are not deducted as expenses; they reduce the amount realized on the sale, which reduces taxable gain. That only matters if your gain exceeds the exclusion, up to $250,000 for a single filer and $500,000 for a married couple filing jointly, if you owned the home and used it as your main home for at least 24 months of the five years ending on the sale date.²

What happens to your Michigan principal residence exemption when you sell?

Your principal residence exemption lowers your own tax bill, and that bill is usually what your proration is figured from. According to the Michigan Department of Treasury, the exemption exempts an owner’s principal residence from the local school operating millage, up to 18 mills. Under MCL 211.7cc(4), the assessor keeps the exemption in place until December 31 of the year in which the property is transferred, or until it is no longer your principal residence.

Subsection (5) of the same statute says that not more than 90 days after exempted property is no longer used as your principal residence, you must rescind the claim by filing a Treasury rescission form with the local tax collecting unit. If you claim the exemption on your new home, the statute lets you keep it on the old one for not more than 3 tax years, by filing a conditional rescission form, while that house is not occupied, is for sale, is not leased and is not used for any business or commercial purpose.

Treasury’s guidance on changes in ownership and uncapping says a transfer of ownership causes taxable value to uncap in the calendar year following the transfer, when it resets to the state equalized value, which is half of the assessor’s estimate of market value, not automatically half of what you paid; the Michigan property tax calculator estimates the buyer’s number from an address, and the homestead exemption filing guide covers the exemption itself.

What Michigan sellers should know

Michigan’s seller-side line items are unusually predictable, because the biggest non-commission costs are written into statute rather than left to local custom.

• Transfer tax is $8.60 per $1,000, and it’s yours by law: $3.75 per $500 to the state plus 55 cents per $500 to the county, with the statute naming the seller or grantor as liable for both. The state portion is payable to the county treasurer within 15 days after delivery of the deed.
• You may be exempt from the state portion entirely: Michigan exempts a conveyance of property carrying a principal residence exemption when the state equalized valuation at sale is equal to or lower than the SEV as of the first tax day after you acquired the property, or after a certificate of occupancy was issued for the residence, whichever came later, and the sale is arm’s length. If you already paid, the seller (or a buyer who paid on the seller’s behalf) may request a refund from Treasury. It covers the state tax, not the county tax. Have your title company check your SEV history before closing, and a Michigan real estate attorney if the exemption is contested.
• Recording is $30 per document: A register of deeds charges $30 regardless of page count, plus $3 per additional instrument on a multi-instrument assignment or discharge. A charter county may adopt its own schedule, so confirm locally. One recording is not yours: Michigan law makes the mortgagee prepare the discharge of your paid-off mortgage, file it, and pay that recording fee.
• Two tax bills, one proration clause: Summer taxes lien July 1 and are generally due September 14; winter taxes lien December 1 and are generally due February 14. Since Michigan law doesn’t dictate the split on a private sale, your purchase agreement decides your share.

What does a Michigan register of deeds need before your deed records?

Under MCL 211.135, the register of deeds must require a certificate that all taxes due on the property have been paid for the 5 years preceding the date of the instrument. If that turns up unpaid taxes or a lien, see selling a home with a lien. The Oakland County Clerk/Register of Deeds says a $5.00 fee for the Treasurer’s Tax Certificate must be included with the recording fee, and Ionia County and Manistee County also list $5 for the certificate on warranty deeds and land contracts, and Montcalm County says the $5 Treasurer’s Tax Certification fee is still due for the documents that require it. Oakland County also says transfer tax is imposed only where the value or consideration exceeds $99.99.

One county adds a cost outside the recording office. In Grand Traverse County, a home whose well or septic system is within 300 feet of surface water needs a time-of-transfer evaluation before it can close. Put the evaluation fee from the county’s 2026 fee schedule in your seller budget, and settle who pays it in the purchase agreement. How well water affects a home’s value covers what the evaluation checks. The title company’s role is covered in how to choose a title company and the home closing process.

How does the sale price round into Michigan’s transfer tax?

Hypothetical example, not an offer. Because both taxes count each $500 or fraction of $500 as a full step under MCL 207.525 and MCL 207.504, one dollar past a round step adds a whole step: a sale at $300,001 is 601 steps, so the state tax becomes $2,253.75 and the county tax $330.55, $2,584.30 in all. The Michigan transfer tax calculator does this rounding for any price.

How do you claim a refund of Michigan’s state transfer tax?

If you were exempt from the state tax but paid it at closing, the refund comes from Treasury. The Michigan Department of Treasury SRETT page says the claim is filed on Form 2796, and the deadline is four years and 15 days from the date of the sale or transfer.

• What to attach for a principal residence claim: Treasury lists proof the state tax was paid, the final settlement statement, proof of the purchase date, and proof of the state equalized value at purchase and in the year of sale.
• How long it takes: Treasury asks filers to allow 6 to 8 weeks after submitting Form 2796 before calling to check the status.
• Where the SEV history comes from: your assessor; how property tax assessments work explains what those values mean.

FAQ: Seller’s closing costs

Here are answers to common questions about seller’s closing costs.

How much are closing costs for a seller?

Typically 6% to 10% of the sale price. On a $300,000 home that is roughly $18,000 to $30,000, with commission accounting for most of it. The remainder covers transfer taxes, title insurance and settlement fees, recording fees, prorated property taxes and HOA dues, and any concessions you agreed to pay for the buyer. Your exact figure appears on the seller’s settlement statement, and how real estate commissions work shows how the largest line appears on that statement.

Do sellers pay closing costs out of pocket?

Usually not. Seller closing costs are subtracted from the sale proceeds at closing, so you receive the net amount rather than writing a check. The exception is a seller whose mortgage payoff plus costs exceeds the sale price, who would need to bring funds or negotiate a short sale with the lender. For the mechanics of how and when the remaining funds reach you, see when a seller gets money after closing.

Which seller closing costs are negotiable?

Commission, title and settlement allocation, and buyer concessions. Broker fees are fully negotiable and not set by law, the owner’s title policy and settlement fee are allocated by your purchase agreement, and every concession dollar is a negotiated term. What you cannot negotiate are statutory items: transfer taxes, recording fees, and your mortgage payoff balance.

Are seller closing costs tax-deductible?

Generally no, but they still reduce your tax. Selling expenses such as commissions, advertising fees, legal fees, and transfer taxes reduce the amount realized on the sale rather than being deducted as expenses, which lowers taxable gain. That matters only if your gain exceeds the $250,000 single or $500,000 married-filing-jointly exclusion. Keep every closing document, review the finances of selling, and confirm your specific costs with a tax professional.

When do I get my escrow balance back after selling my house?

Usually within a few weeks of the payoff. Under the CFPB’s Regulation X, 12 CFR 1024.34(b) (current as of October 26, 2026), a servicer must return any remaining escrow funds within 20 days, excluding legal public holidays, Saturdays and Sundays, after you pay the loan in full. If your new loan comes from the same lender, owner or servicer, you can agree to have the balance credited to the new escrow account instead. See mortgage escrow accounts.

Will the title company report my home sale to the IRS?

Often, yes. According to the IRS Instructions for Form 1099-S (revised December 2026), the person responsible for closing the transaction generally files Form 1099-S. A principal residence sale of $250,000 or less, or $500,000 or less when the certification says the seller is married, is exempt if each seller signs a certification under penalties of perjury that the home was a principal residence, the full gain is excludable and there was no period of nonqualified use.

If the buyer agrees to pay the transfer tax, is the seller still responsible?

Yes. A purchase agreement can move who pays the tax at closing, but not who the law holds liable. The Michigan Department of Treasury treats the seller, as grantor, as the party responsible for the state transfer tax, which the county collects when the deed records. If the buyer takes it on, check that the title company shows it on the buyer’s side of the settlement statement and keep the signed agreement, because the statute still names you.

Do the two years of living in a home have to be continuous for the tax exclusion?

No. According to IRS Publication 523, the 24 months of residence can fall anywhere within the 5-year period ending on the date of sale, and it does not have to be a single block of time. Capital gains tax exemptions on a home sale covers partial exclusions.

The bottom line on seller’s closing costs

Seller’s closing costs typically run 6% to 10% of the sale price with commission included, roughly $18,000 to $30,000 on a $300,000 home, and they come out of your proceeds rather than your pocket. Commission is the largest line and the most negotiable, with no standard rate and no MLS offers of buyer-agent compensation since August 17, 2024. Michigan’s statutory piece is small by comparison: $8.60 per $1,000 in state and county transfer tax plus $30 per document to record, both charged to the seller. Everything else is a contract term you can read before you sign.

If you’re ready to turn those proceeds into the next house, talk to Align Lending. We’ll shop your purchase or bridge financing across our lender network and show you the numbers side by side before your sale even closes. Call 248-506-5727 or start online.

Footnotes:

1. Example figures in this article are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. Real estate commission is fully negotiable and is not set by law; the 5% used above is an arithmetic assumption, not a market rate or a recommendation. Title, settlement, and proration amounts vary by provider, county, closing date, and contract. Your actual figures will appear on your seller’s settlement statement. Return to text.

2. This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Whether a selling expense reduces your amount realized, whether you qualify for the section 121 exclusion, and how depreciation, divorce, or inherited basis affect your gain all depend on your individual circumstances. Consult a qualified tax professional, and a Michigan real estate attorney for questions about title, liens, or transfer tax exemptions. Return to text.

Sources: seller closing cost totals of 6% to 10% of sale price including agent commissions, Zillow and Redfin seller cost breakdowns (industry estimates, not primary sources). Michigan state real estate transfer tax of $3.75 for each $500 or fraction of $500 of value, MCL 207.525; seller or grantor liable and payment to the county treasurer within 15 days after delivery of the instrument, MCL 207.523(2) and (3). Michigan county real estate transfer tax of 55 cents for each $500 in a county under 2,000,000 population, with up to 75 cents authorized only at 2,000,000 or more, MCL 207.504; tax imposed on the person who is the seller or grantor, MCL 207.502(2). State transfer tax exemption for a conveyance of property for which the seller claims a principal residence exemption under MCL 211.7cc, where the state equalized valuation at transfer is equal to or lesser than the SEV determined as of the first tax day after issuance of a certificate of occupancy or the date of acquisition, whichever comes later, and the transaction was at an arm’s-length price, plus the refund request procedure, MCL 207.526(u). Register of deeds recording fee of $30 per document regardless of page count, $3 per additional instrument assigned or discharged, and a charter county’s authority to adopt its own fee schedule, MCL 600.2567(1)(a), (1)(b) and (3). Duty of the mortgagee to prepare the discharge of a paid mortgage, file it with the register of deeds, and pay the recording fee, MCL 565.41(1). Michigan summer taxes becoming a lien against the property on July 1 and interest being added to summer taxes collected after September 14, MCL 211.44a(4) and (6); winter taxes becoming a lien December 1 and generally due February 14, Michigan Department of Treasury property tax guidance. Settlement agent must provide the seller’s disclosures reflecting the actual terms of the seller’s transaction no later than the day of consummation, with corrected disclosures within 30 days of a qualifying post-closing event, 12 CFR § 1026.19(f)(4). Accurate payoff statement within seven business days of a written request, with a reasonable-time standard for bankruptcy, foreclosure, reverse and shared appreciation mortgages, and natural disasters, 12 CFR § 1026.36(c)(3). Prepayment penalty limited to qualified mortgages that are not higher-priced, 36-month maximum term, 2% cap in the first two years and 1% in the third year, 12 CFR § 1026.43(g). Seller may not require the buyer to purchase title insurance from a particular title company; treble damages for violations, 12 U.S.C. § 2608. Offers of compensation prohibited on covered MLSs and written buyer agreements required effective August 17, 2024, and broker fees fully negotiable and not set by law, National Association of Realtors. Selling expenses including commissions, advertising fees, legal fees and transfer taxes reduce the amount realized, IRS Publication 523. Home sale gain exclusion of $250,000 single and $500,000 married filing jointly with a 24-month ownership and use requirement within the five years ending on the sale date, IRS Topic No. 701 and Publication 523.

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Transfer taxes, recording fees, title customs, proration conventions and program limits change and vary by property, county and contract; confirm your figures with your closing agent and settlement statement, and consult a qualified tax professional or a Michigan real estate attorney about your situation. Figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending is an independent Michigan mortgage broker, NMLS #2041154.

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