If you're selling a home in Vermont, one of the biggest questions you may have is, "What closing costs will I have to pay?"

The answer depends on your property, your mortgage, the terms of your purchase contract, and whether you are a Vermont resident. While buyers often focus on their closing costs, sellers also have expenses that are typically deducted from their sale proceeds at closing.

Understanding these costs before accepting an offer can help you avoid surprises and better estimate how much money you will receive after the sale.

At Peet Law Group, we represent Vermont home sellers throughout the closing process and help them understand their costs before closing day.

Closing Costs vs. Other Amounts Deducted From Your Sale Proceeds

Many sellers use the term "closing costs" to describe every deduction shown on their closing statement. In reality, there is a difference.

Closing costs generally include the expenses directly associated with completing the transaction, such as attorney fees, real estate commissions, recording fees, and certain prorations.

Other deductions may include paying off your existing mortgage, satisfying a home equity line of credit, and Vermont non-resident withholding if applicable. These items reduce the amount you receive at closing but are not technically considered closing costs.

Reviewing a preliminary settlement statement before closing can help you understand exactly where every dollar is going.

Typical Closing Costs Vermont Sellers May Pay

Real Estate Commission

For many sellers, the largest closing expense is the real estate commission.

While commission rates are always negotiable, a total commission of approximately 6% of the sale price remains common in many Vermont residential transactions. The commission is typically divided among the real estate brokerages involved in the transaction according to their listing agreement and MLS compensation arrangements.

Attorney Fees

Most Vermont home sellers hire a real estate attorney to prepare legal documents, coordinate with the buyer's attorney and lender, resolve title issues, and guide the transaction through closing.

Some attorneys bill by the hour, while others charge a flat fee.

At Peet Law Group, we offer flat-fee pricing for most residential seller transactions, allowing clients to know their legal fee in advance rather than worrying about unexpected hourly charges.

Recording Fees

Sellers may also pay recording fees for documents that must be recorded in the town land records, such as mortgage discharges or other documents necessary to complete the transaction.

These costs are generally modest but are part of many Vermont closings.

Property Tax and Other Prorations

Certain expenses are typically prorated between the buyer and seller based upon the closing date.

Depending on the transaction, these may include:

• Property taxes
• Homeowners association or condominium association dues
• Rent and security deposits if the property is tenant occupied
• Fuel, utility, or other agreed-upon adjustments

The goal is to ensure each party pays only its fair share through the date ownership changes.

Seller Contributions Toward Buyer's Closing Costs

Although not required, purchase contracts sometimes provide that the seller will contribute toward a portion of the buyer's closing costs.

These contributions are negotiated as part of the overall purchase price and contract terms and should not be confused with the seller's own closing costs.

Mortgage Payoffs and Other Amounts Deducted at Closing

One of the largest deductions from a seller's proceeds is often the payoff of existing loans secured by the property.

These deductions may include:

• Remaining mortgage principal
• Accrued interest through the payoff date
• Mortgage payoff or processing fees charged by the lender
• Home equity line of credit (HELOC) payoffs

Although these are generally not considered closing costs, they are paid directly from the seller's proceeds at closing.

Vermont Property Transfer Tax

One pleasant surprise for many Vermont sellers is that the buyer customarily pays the Vermont Property Transfer Tax.

This differs from many other states where sellers are responsible for paying all or part of the transfer tax.

While parties can negotiate different arrangements, Vermont buyers typically pay this tax as part of their own closing costs.

Vermont Non-Resident Withholding

If you are not a Vermont resident when you sell Vermont real estate, Vermont law may require a portion of your sale proceeds to be withheld at closing and remitted to the State of Vermont.

This withholding is intended to help ensure payment of any Vermont income tax that may ultimately be due from the sale.

Fortunately, withholding is not always required in the full statutory amount.

Depending on your circumstances, it may be possible to reduce the required withholding or eliminate it altogether by obtaining approval before closing.

Peet Law Group regularly assists non-resident sellers in evaluating whether they qualify for a reduction or exemption and preparing the necessary documentation when available.

If you are an out-of-state owner selling Vermont property, it is important to address this issue well before your scheduled closing date.

Capital Gains Taxes

Many sellers are concerned about capital gains taxes.

If your sale results in a taxable gain, you may owe federal and Vermont capital gains taxes. However, these taxes are generally not collected at the closing table.

Instead, any tax that is due is typically reported and paid when you file your income tax returns for the applicable tax year.

Whether capital gains tax applies depends upon many factors, including:

• Your purchase price
• Improvements made to the property
• Selling expenses
• Whether the property qualifies as your principal residence
• Available federal exclusions
• Your individual tax situation

Because every seller's tax situation is different, you should consult your tax advisor regarding the tax consequences of your sale.

Sample Seller Closing Statement

Every transaction is different, but a seller's closing statement may include items such as:

Credits

• Sale price

Deductions

• Real estate commission
• Attorney fee
• Mortgage payoff
• Home equity line of credit payoff (if any)
• Mortgage interest through payoff
• Recording fees
• Property tax adjustments
• HOA or condominium prorations
• Vermont non-resident withholding (if applicable)
• Other negotiated adjustments

Balance

• Net proceeds paid to the seller

Reviewing a draft settlement statement before closing allows sellers to ask questions and confirm that all figures are accurate before funds are disbursed.

How Vermont Sellers Can Reduce Closing Costs

Although some costs cannot be avoided, sellers can often reduce unnecessary expenses by planning ahead.

Some practical ways include:

• Work with an experienced Vermont real estate attorney who offers flat-fee pricing instead of hourly billing.
• Resolve title issues as early as possible to avoid delays and additional costs.
• Carefully review requests for seller-paid buyer closing costs during contract negotiations.
• Provide mortgage payoff information promptly so accurate payoff figures can be obtained.
• If you are a non-resident, determine well before closing whether Vermont non-resident withholding can be reduced or eliminated.

Early planning often results in a smoother closing and fewer last-minute surprises.

Contact the Peet Law Group for more information about seller closing cost and our services for the sale of a Vermont home.