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Closing Costs in Philadelphia PA When Selling A House

By Nicole Sarrate

Brotherly Love Real Estate

Frustrated? I’m not surprised. Trying to account for closing costs in Philadelphia when selling an investment property or home can be a daunting task. Truth is Philadelphia closing costs are like a Rubrik’s cube. You’re only trying to figure out a complicated algorithm of variable expenses. No biggie….


Ah, yes, I can hear my fellow millennial ask, aren’t there just calculators for that?! Sure, but I’m not just here to tell you what costs to expect. I also want to help you evaluate what costs you can skip and provide saving strategies to ensure you pay the minimal amount possible, for your situation.

How To Calculate Closing Costs When Selling a Home

I’m sure you’ve seen the many articles out there that only provide you the data for selling an investment property or home. So, just to get it out of the way before getting to the good stuff, here’s the gist of what a seller can pay in closing costs in Philadelphia. 

  • Pre-sale Home Inspection: $400-$800
  • Home Improvements 
  • Home Staging 
  • Real Estate Agents Commissions: 5-6%
  • Seller Concessions: typically range from 2-5% but can vary if applicable. 
  • Attorney Fees: Between $1,000-$2,000 
  • Recording Fees: $256.75
  • Realty Transfer Tax: 3.278% (City) + 1% (PA Commonwealth) = 4.278% (Total)
  • City Cert Reimbursement (property dependent): around $125
  • Title Insurance: can range from $500 – $5,000+, depending on the purchase price of the property. 
    • You can also expect to pay additional fees associated with the title research and any necessary work to clear liens, defects, or judgments from the title, if necessary. 
  • Mortgage Payoff / Loan Pre-payment penalty
  • Prorated Property Taxes 
  • Taxes on the home sale 
  • Homeowners’ Association (HOA) Transfer Fee 
  • Outstanding Liens or Judgments against the property
  • Holding Costs
  • Moving Costs

One additional note before we get started. These costs are due at closing and come out of the proceeds of the sale. This means you don’t typically have to pay out of pocket unless you’re selling for less than your mortgage.

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Philadelphia Closing Costs are Expensive

There are three optional closing costs associated with selling an investment property or home for the max possible price. 


Pre-sale home inspection: $400-$800


While optional, the biggest reason to consider doing a pre-sale home inspection is that unanticipated repairs are one of the primary reasons deals fall through. Doing a preemptive inspection would give you the heads up on anything that could affect negotiations. If Google has taught us anything, it’s that data is everything these days. If there are big-ticket items, it’s better to know that from the get-go to target non-inspection contingency offers and limit the risk that an offer falls apart after the property has been taken off the market. Just keep in mind that Pennsylvania law requires a seller to disclose any known issues.

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Home improvements 

Most home improvements fall into three categories: 

  • Maintenance & Repairs
    • Depending on the condition, this may or may not be required for the sale. Some loans, typically conventional loans, will require the home to meet certain living standards to be approved for financing. If your property is structurally defying gravity, it may be best to target investors with cash or construction-friendly loans. 
  • Landscaping/Curb Appeal
    • These costs vary greatly depending on the amount of work needed. You may choose to go DIY or hire a pro. Many factors, including the size of your lawn, can affect even the DIY price. 
  • Value-add Renovations
    • Whether you’re a real estate professional selling an investment property or not, here’s where the numbers should hold the answers. If the return outweighs the costs, then you may want to consider going this route. Just remember to include in the costs a stress tax for the trouble of managing the work.  


Home Staging 

While home staging could cost you upfront, it could save you money in the long run. By drawing attention to the home’s lovely attributes, it may both help justify a higher asking price and help you sell your house fast in Philadelphia. Not to mention, you’d save a few bucks on holding costs. Similar to landscaping costs, you may choose to go pro or DIY. While pros have experience highlighting a property’s perks with a neutral tone, you may discover you have an eye for design through DIY and save on this cost. 


The key here is time. Can you afford to experiment with your design acumen or is it best to go with a pro that has a proven track record of high returns? 


Saving Strategies – here are a few tips on how to save on these closing costs in Philadelphia: 

  • Call local Philadelphia landfills, to ask if they have any rehab items you can take off their hands. One example would be unfinished containers of white paint. Sure, you’ll still have to confirm it hasn’t gone bad, then combine and mix the paint, but you may just get your most expensive painting material for free! 
  • On that note, you could also visit construction sites to request the landowner’s permission to take any stones, old bricks, and other building materials that they may be dumping. 
  • Any realtor will tell you the kitchen is one of the most important rooms in a property sale.  If a full kitchen rehab is not in the cards, maybe you could just upgrade some of the appliances with newer, gently used, stainless steel appliances. If you’re considering this option, here’s a good article on things to ponder. 
  • While full-blown staging may or may not be necessary, there are some simple ways to do so with little cost or time commitment. Check out this article on 4 Tips on Staging Your Open House
  • Speaking of staging, lighting is another lost cost way that adds a lot of appeal to your property. Lucky for you, we have you covered with our 10 Creative Ways to Add Lighting to Your House in Philadelphia
  • Although landscaping may not always be an applicable Philadelphia closing cost, there are always ways to spruce up outdoor space in both urban and suburban environments. Here’s an article on 5 Creative Landscaping Ideas to help guide your way. 


Mindset Mix

When considering how these pre-sale closing costs in Philadelphia fare, the two most important factors to study are the economy of the market and the competition. Is it a seller’s market or a buyer’s market? How long are properties sitting around? What is the competition doing? Better yet, what’s different about those properties that sell fast?

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The Art of Negotiating Closing Costs in Philadelphia

While these selling costs could still be considered optional, if you’re unfamiliar with the selling process, it’s in your best interest to get some professional guidance.


Real Estate Agents Commissions

Although it can be up to 6%, in Philadelphia 5%, split between the seller’s and buyer’s agent, is quite typical. It may be tempting to skip this expense. However, if you’re not an expert in your market and want to make sure to sell for top dollar, you should seek the advice of a real estate agent. They can provide a pulse on the market, gauge what price would sell your property in your target timeline, and advise what’s worth spending on to ensure you get the best return for your investment.

Seller Concessions

Seller concessions are a typical Philadelphia closing cost in a buyer’s market or if the property requires significant repairs. This is also the area where it can get the diciest on who pays closing costs when selling a house by owner.


There are two typical types:

  • Financing concession – covering a portion of the buyer’s closing costs, which may include origination fees, discount points, commitment fees, etc.
  • Sales concession – unrelated to the purchase of the property and may include cash, furniture, moving costs, etc.


While the cost may vary greatly, it’s typically between 2-5%.


However, depending on the financing the buyer is using, there may be limitations on how much in concessions the seller may give.  This is specifically the case with government-subsidized loans such as VA and loans backed by Fannie Mae.


Saving Strategies – since you’re wondering how much does it cost to sell a home, here are some more tips on how to save on these costs:

  • If you decide to use an agent and are both buying and selling a home, you could negotiate a lower commission with your real estate agent by agreeing to do both transactions with that agent.
  • There are also discount agents. However, it’s important to be aware that these agents may offer less of the resources you may need, such as marketing.
  • An alternative to a real estate agent, saving on that commission, is selling to a wholesaler off-market. While the property will probably be swooped up in no time, wholesalers tend to offer less than retail. You would just need to consider what you could get retail minus the agent fee versus what the wholesaler’s offer is.
  • Of course, there is always us! We buy houses in Philadelphia as is, with no seller repairs required, and no commissions or fees. We also offer cash deals for quick sales. #ShamelessPlug

Another great resource when selling your property is a good real estate attorney. Bonnie Galam, of The Galam Firm, who so graciously offered some insight for this article, shared a great tip. According to Pennsylvania law, fixtures are included in the property sale. So, if your property includes any permanent valuables or antiques, such as chandeliers, be sure to emphasize that during negotiations for a higher final sale price.

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Mindset Mix

While strategizing on how to save on negotiating costs when selling an investment property or a home, your primary question should be how well do you know your market and your target buyer.  


As mentioned, if the answer is not that well, you’ll probably get a better price and sell faster with a real estate agent. However, you should consider the commission costs if you get a good offer off-market. 


Also, if you’re already pretty savvy in your market and know your buyer, FSBO may be the right route to go. If you’re still unsure if you fit into this category, here’s a good article on Selling a House By Owner in Philadelphia and Who to Sell My House in Philadelphia to?

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The Final Stages of Closing Costs in PA

Here’s where the closing costs in Philadelphia get just a tad bit unavoidable. You know… death and taxes; it’s a cliché for good reason.


Attorney Fees

Real Estate attorneys in Philadelphia for a standard home sale will range from about $1,000-$2,000. Although if you’re selling an investment property with more building investigation needed or a property with a condo association, the cost may be a bit more. Keep in mind, you are not required in Philadelphia to have an attorney represent you on a property sale.


However, if you’re new to the area, or selling an investment property or home, it’s nearly reckless not to have someone on your legal side. Even those with experience know that attorneys are like insurance, they may not be required but the minute you choose not to have one, murphy’s law will almost certainly rule.


Even so, this still falls under an unavoidable cost because an attorney is required in Philadelphia to transfer a deed. So even if you don’t have one representing you, you can expect your title company to hire one for about $100-$200 to handle that transaction.

Recording Fees

Effective as of 1/31/2018, the required fee under the PA Acts 113 and 126 of 2014, is $256.75.


Realty Transfer Tax

When selling an investment property or home in Philadelphia, you must pay 3.278% to the City of Philadelphia and 1% to the Pennsylvania Commonwealth for a total transfer tax of 4.278%.


Another team member who can provide some valuable guidance during the selling process is a Title expert. Heidi Becker, a licensed title insurance agent at National Integrity Title Agency, highlighted an important consideration when calculating your Realty Transfer Tax. Philadelphia’s updated regulations now apply the tax on the assessed value OR the fair market value (i.e. sale price), whichever is higher.  So just be sure to use the higher value when entering it into one of those fancy Philadelphia closing cost calculators.


It’s customary in Philadelphia for this tax to be split evenly between the buyer and the seller. Although, this may vary depending on the current economy of the market. No matter how you negotiate this tax with the buyer, keep in mind that the City has the right to collect 100% of the tax from either party and there could be a penalty of up to 50% if not handled properly. All the more reason to have a solid title company and attorney on your team.


City Cert Reimbursement

Roughly $125, this is a Philadelphia fee that certifies, specifically when selling an investment property, that there are no violations with the Department of Licenses and Inspections. This is commonly applied if the homebuyer is an investor that doesn’t plan on occupying the property.


Title Insurance

This is a tricky one to pin down a price for as various components determine price, including the type of property, purchase price, lending requirements, etc. Generally speaking, the insurance price varies from about $500 for a property less than $30,000 and up to $5,000 for a property of $1,000,000. Anything above that is a set fee per $1,000, depending on which range the sale price falls into. This premium cost is regulated by the Commonwealth of Pennsylvania.


However, there are also fees often tacked on to the premium costs for the title companies’ services (such as a document prep fee, notary fee, etc.) which can vary depending on the company and scope of work. For example, our local title expert, Heidi, advises that lenders typically ask for endorsements that can add $425+ to your title closing costs in Philadelphia. Wait, but isn’t title insurance meant for the buyer and the lender of the buyer?!


Yes, my dear friend, this is true. However, it is customary in Philadelphia when selling an investment property or home for the seller to pay the owner’s title insurance costs and the buyer to pay the lender’s insurance costs. This is because the buyer wants to ensure the seller has the right to sell the property and the property will be delivered clear of any liens. 


Of course, this is all dependent on the circumstance and may or may not be an applicable fee. If the market is hot for sellers, it would be plausible for sellers to plop this fee onto the buyer’s Philadelphia closing cost column.

Saving Strategies – so now that we’ve gone over some of the muck on who pays closing costs when selling a house by owner, these additional saving tips may make a bit more sense.


The easiest place to start, in a favorable market, is to negotiate to have the buyer pay all the Philadelphia closing costs. At the very least, you may be able to get the buyer to pay for their owner’s title insurance. If you are stuck footing the bill, don’t just use the first title company that comes around. As mentioned, while premium costs should be relatively consistent in PA, fees may vary, sometimes greatly, so shop around for companies with minimal fees. Heidi, an obvious wealth of knowledge on the matter, also suggests assisting in the title due diligence to reduce costs. One common practice for a title company is to hire an outside coinventor to conduct some of the due diligence on the title search. If you provide these documents to the title company instead, you could save on that ~$200-$450 fee.


Mindset Mix

The most important factor to consider when contemplating these costs to close the deal is what are the current market conditions. 


Unfortunately, when it comes to closing the deal, many of these closing costs in Philadelphia are mandatory. However, under the right market conditions, you may be able to save by having the buyer take on most of these expenses.  

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Unexpected Closing Costs in Philadelphia PA

Unexpected Philadelphia closing cost is like when you’re super excited to dig into that pint of ice cream you have at home only to discover it has freezer burn along the top. You’re hoping the whole thing isn’t ruined, but if we’re being honest, you’ll probably try to eat it anyway.


I’m here to give you that heads up, so you swing by the market before heading home just in case.


Mortgage Payoff / Loan Pre-payment Penalty

If you’re selling a home with a mortgage, I’m sure you’ve accounted for the mortgage payment. However, what may not be so obvious is that some loans come with a loan pre-payment penalty. If applicable, this number will need to be added to your analysis to have a clear picture of what you need to sell your property for to hit your target return.

Prorated Property Taxes

I know, I know, this one you want to forget. I’m sorry! But since Uncle Sam certainly won’t let you, I would be doing you a disservice not to remind you that taxes are due up until the day of closing.


Taxes on the home sale

UGH, more taxes?! Any good news???… maybe. Check out the saving strategies below for some legal ways to save on the capital gains tax when selling an investment property or home.


Homeowners’ Association (HOA) Transfer Fee

While HOAs are not common with multifamily or single-family homes in Philadelphia, they are typical with new planned developments and condos. In those cases, it’s important to inquire if the HOA charges a transfer fee. As a comparison, nationally, the average HOA fee is $331, in Philadelphia, the rate is about $449 a month, and in Northern Virginia average HOA fees are anywhere from $600 to $1,200 per year.


Outstanding Liens or Judgments against the property

This is one of those situations that tend to make sellers a bit nervous, and another perfect example of the importance of having an excellent real estate attorney help you navigate tricky situations.


Brilliant Bonnie also shared her real estate legal expertise on this matter. Just because you have a lien or judgment on a property doesn’t mean you must pay it off in advance of selling your property. Most of the time the sales proceeds will pay off any liens at closing. It just needs to be taken into consideration when negotiating with a buyer. If you owe more on the house than the purchase price, you may need to negotiate a “short sale.” It’s also important that the buyer is made aware of the situation up front, because otherwise, Heidi will find it when she does your title search creating a snag in your previous negotiations.


This also applies if you’re selling an investment property or home with violations or permit issues. If you’d like to know more about this specific situation, it may be helpful to check out this article on how to Sell My House in Philadelphia with Code Violations.


Holding Costs

These closing costs in Philadelphia may include mortgage, insurance, taxes, utilities, etc. Basically, anything to keep your property running.


To get a sense of how much these holding costs amount to, between 2018-2019 (because let’s face it, 2020 was an unreliable year, at best) the median days on market in Philly ranged from 50-80 days. So, you should budget at least 2-3 months towards this Philadelphia closing cost.


While you may think it would be a good idea to skimp on some of these expenses, by shutting off utilities if no one lives in the property, for example, I wouldn’t suggest it. If you did so, that may affect how quickly the property sells. I mean, how long would you spend daydreaming in a home with no heat in winter, or worst yet, how would you be able to plan in a property with no light?!


If you’re selling an investment property with tenants, this may not be as big of a financial burden as your tenants will offset some of the holding expenses. However, if you are trying to sell a property with tenants, here’s another article on 6 Concerns Selling A House with Tenants in Philadelphia you should be aware of.


Moving Costs

If you’re selling your home, make sure to budget for moving costs such as supplies, movers or a moving truck, etc.


Also, if you’re using movers, be extra cautious during your research.  Some moving companies will intentionally load the truck to take up maximum, instead of minimum, amount of space. Since many companies charge by the space, this means a larger bill for you than quoted and a bigger paycheck for them for the same amount of work!


Now, if you’re selling an investment property you may think you’ve dodged this Philadelphia closing cost; however, that may not be the case. Take into consideration if you’re selling a house with tenants that you may need to pay them cash for keys to incentivize them to move by covering their moving costs.


Saving Strategies – as promised, here are some final ideas on how to save on these closing costs in Philadelphia.

  • The biggest expense when selling a property will be your tax burden on the proceeds of the sale, also known as capital gains tax. Fortunately, in a moment of brief insanity, our dear Uncle Sam created two legal loopholes to cut us some slack:
    • A 1031 Exchange allows you to avoid paying capital gains tax when selling an investment property if you reinvest the proceeds from that sale into a like-kind investment within a certain time limit. 
    • 2-Out-of-5-Year Rule is specifically for selling your primary residence. If you’ve occupied the property for any 2 (even non-consecutively) out of the last 5 years, you can write off some proceeds. Currently, the amounts stand at $250K when filing your taxes as single and $500K when filing with a spouse. 
    • It’s critical to keep in mind that these rules and amounts can change at the whim of Washington, so be sure to call your CPA or real estate attorney to confirm any real estate tax strategies you’re looking to employ. Not only can an attorney help you navigate the lay of the law, but the really good ones, like Bonnie, work with other investors regularly and may even be able to help you find properties to fit your 1031 Exchange needs. 
  • Depending on your expenses, holding costs may also creep up on you if you don’t have a tenant currently occupying the property. In certain situations, a short-term rental, like an Airbnb or temporary housing for health care professionals, might be the right fit. This income may even offset the staging costs. 
    • Pro Tip: you may think this sounds like a whole lot of work and it can be! Fortunately, there are professionals out there, like Scott Yesner of Bespoke Stay, that focus on managing STRs. These professionals can help guide you on whether this savings strategy would be the right approach for you. 
  • Remember that day when Jim needed a ride to the airport? No, not PHL, the time when you drove him to Newark! The easiest method to save on unexpected Philadelphia closing costs is by recruiting some friends for moving day. If Jim still needs a little convincing, tell him it won’t be so bad since you read the 3 Strategies to Make Moving Your Home in Philadelphia Easier. You’re welcome. 
  • Also, if you’re relocating for work, you could ask your employer about paying for your moving costs. It is not unusual in these circumstances for your employer to pay for the movers and even temporary housing until you find your permanent new home.


Mindset Mix

What matters most when considering these unexpected closing costs in Philadelphia is the big picture. What are your specific situation and motivation to sell? Is time critical?


If you’re selling an investment property but have a pre-payment penalty, can you hold out until that penalty period expires? If not, maybe you can collect the resources to do a 1031 Exchange and save on the capital gains tax.


If you’re selling your home, have you lived there at least 2 years out of 5? If not, can you move back for the next 6 months, or whatever time is still needed, to meet the 2-Out-of-5-Year Rule? We buy homes throughout Philly while making it affordable for you, the homeowner. Our company covers seller closing costs on the transactions that we facilitate!