What closing costs do I pay when I sell my home?

As it pertains to homes sold in the Northeast Florida area…

Here is a list of items that are normally paid for by the seller in a real estate transaction:

  • Deed stamps (or doc stamps) [Cost = .007 * Sales Price] – The documentary stamp tax is imposed under section 201.02, Florida Statutes (F.S.).  To the best of my knowledge, it is essentially a tax that goes in to the state coffers.  Not sure if it has any specific allocation in the state budget. 
  • Home warranty [Cost = $350-500] – This is sometimes offered by the seller to ensure that the appliances/systems are covered for a year.  There are several different companies that can provide a home warranty.  ERA provides a warranty that is administered through American Home Shield
  • Owner’s title insurance policy [Old Republic has a rate calculator here] – If someone comes along and makes a claim against the title, this will provide protection.  For example, if someone were to knock on your door and say, “Hey my grandfather left this property for me in his will…  It’s mine.”  That’s probably not a legal battle you want to take up on your own. 
  • Title insurance endorsements [See Rate Calculator link above] – If you live in a planned unit development (or condominium) there will be certain endorsements that ride along with the title policy.  As well as a few other endorsements that coincide with the general title policy. 
  • Title search [Cost = $50-125] - This is the fee charged by the title company for reviewing and examining the chain of title to verify that a title insurance policy can be obtained.
  • Closing attorney/Settlement fee [Cost = $200-500] – What the title company (or attorney) receives for coordinating the closing of the transaction and accounting for all funds.
  • Real estate brokerage fee [Completely Negotiable in the State of Florida] - Normally paid by the seller but not always.  According to the National Association of Realtors 2011 Profile of Home Buyers and Sellers, roughly 80% of real estate commissions were paid by the seller in a transaction.
  • Survey [Cost = $200-500] - Done by a professional surveyor, this will show the boundaries of the property.  Most lenders will require that this be done.  It’s usually a good idea to have it done anyway.  But, if there have been no new buildings, fences, etc. raised since a previous survey, then a buyer may be willing to accept an old one. 
  • Tax service fee [Cost = $100-150] - This is charged by a lender for coordinating the payment of real estate taxes.  As if interest on the loan isn’t enough!  The reason this would be a seller cost, is that FHA loans sometimes require it to be paid by the seller.
  • Satisfaction of mortgage and recording fee [Cost = $50-100] - The fee the county charges to file and keep record of each important document (i.e. deed, mortgage, note, etc.)
  • SELLER’s courier fees [Cost = $50-100 if any shipping is needed]  - If you live out of town and the title company has to overnight paperwork, there’s usually a nominal fee charged by the closing agent.  
  • Repairs - Normally repair work will be paid outside of closing.  On occasion, the seller will elect to have contractors paid from the funds of the closing. 
  • Wood-destroying organism report (Seller must pay if VA) [Cost = $60-130] - An inspector does have to have a certification to perform this inspection.  And, it simply identifies any rotten wood or termite damage on the property. 

If you’re looking for a “rule of thumb” to give a rough estimate of the costs above.  I tell sellers to use about 3% (excluding real estate commissions) of the purchase price for a conservative estimate of their total closing costs.  This will by no means give you an exact amount, but it should put you in the ball park. 

In case you weren’t bored by the bullet point list above – I’ve included a screen capture of the first page of an actual settlement statement. Otherwise referred to as a: HUD-1 (open the link for a blank version). 

Feel free to call or text me with questions about settlement statements, (904) 434-5154.  I’m not a closing agent, but after you’ve looked at hundreds of HUD-1’s, you develop a knack for knowing how they work… 

Take care!

 

Comments

  1. says

    Nicely explained Jeff. I understand that these are customary for Northeast Florida – which line items are easier to negotiate over to the buyer?

    Also, if you are looking at a short sale would that change anything?

    • says

      Good question Kellen.

      And you are correct, this would apply only to the NE Florida area (even in this area some still debate on who’s to pay what).

      To answer your question. Everything in real estate is negotiable, so it is possible that a buyer could pay any/all of these costs on behalf of the seller. In today’s market, it is more common that the seller is subsidizing some of the buyer’s costs though.

      That being said, the easiest costs to shift to the buyer would be:
      *Home warranty
      *Title insurance endorsements
      *Settlement fee (and allow the buyer to choose the closing agent)
      *Tax service fee (this is really for the buyer’s benefit, but FHA loans typically require that the seller pay this)
      *Repairs (sell the property “as is” and ensure that there is language in the contract saying such)
      *WDO inspection (again the buyer would typically pay for this, except when they are using VA financing)

      Regarding whether or not a short sale would have an effect on the closing costs split. Technically, it shouldn’t matter. However, the lender who is approving the sale will often give a net price that they want to receive. In which case it doesn’t matter how the closing costs are split, or what the price is, as long as they get the net amount required. And, if you’re the seller in the transaction, then you aren’t going to walk away with any money regardless of the closing costs split.

      Side note, when it comes to buying a short sale or foreclosure, you have to pay very close attention to how the closing costs are being split. I’ll address this in a post coming soon on buyer closing costs!

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