Closing Costs for Sellers
When preparing to sell your home, it’s important to remember that there will be some expenses at closing. While fees vary by state, most sellers can expect to pay anywhere from 8-10% of the sale price. This amount will be deducted from the profit of your home. Factor this in as you calculate what you’ll have left over to pay off your home loan, and/or put toward a down payment on your next house.
Here are the common fees and expenses you can plan for:
Agent commission
As the seller, you will pay a commission to both the listing agent (your agent who helps you sell the home) and the buyer’s real estate agent. This typically amounts to 6% (3% per agent)– leaving about 2-4% for all the rest of the expenses.
Title fee
The title fee (or government transfer tax) is the tax you’ll pay when transferring the title of your home to the buyer at closing. The transfer tax amount is based on median home value and varies greatly by state.
Title insurance
This is a one-time payment that protects the future owner from defects, such as improperly recorded documents, fraud, liens, and more. The owner’s title insurance can range in cost from $1,000 to $4,000; however, if you’ve owned your house for less than 10 years, ask if there’s a reissue rate available. If there is, your rate will be lowered as the policy covers a shorter period.
Escrow fees
Escrow refers to the waiting period just before the property is ready to change hands. During this time, all the buyer’s and seller’s money related to the sale of the home is kept in a financial account that is overseen by an escrow representative. Escrow minimizes the risk of fraud by making sure that no one can steal anybody’s money or property. This fee is typically around 1% of the home sale price and is usually split 50/50 between the seller and the buyer.
Prorated property taxes
Upon closing, you may have to pay the prorated property taxes to cover the time you were living in the home up to the date of the sale.
Homeowners Association (HOA) fees
These fees apply to anyone living in a community that’s subject to an HOA. Like property taxes, you’ll be responsible for settling your portion (up to the closing date.)
Attorney fees
While Florida doesn’t require you to use an attorney during the closing process, hiring one might be helpful. Attorneys can help expedite the process, while also protecting your interests.
Closing costs are due at the time of signing of the purchase and sale agreement which typically happens a day or two before the actual close date. Because the costs are taken out of profits from the sale, you don’t need to worry about bringing any actual money with you to the signing.
