Closing costs are the taxes, fees and other costs associated with finalizing, or closing, a real estate transaction. Varying widely based on the city, state and county where the property is located, these closing costs are often thousands of dollars (though usually less expensive for the seller than the buyer). An understanding of the different costs that are paid by the buyer and the seller is important, but this article focuses primarily on the amount that sellers can expect to have deducted from their proceeds when the sale is finalized.
Here are some of the expenses sellers are likely to be responsible for:
1. Real estate commission – A percentage of the sale price paid to the real estate agent, agreed upon when you listed your property with the agent. It is one of the biggest costs that will be deducted from the sales proceeds.
2. Title and lien search – This process ensures that you, the seller, have the right to sell the property. It also finds out if any restrictions or allowances are attached to the land (e.g., an easement for power lines). Finally, it will discover any liens on the property, including mortgages, back taxes, or construction liens.
3. Clearing title defects – If the title search turns up any liens on the property, the seller will need to pay these off to ensure a clear title for the buyer.
There are other charges that may be assessed against the seller or the buyer, or may even be split, depending on what is usual for each state. Some of those costs include:
1. Document stamps (also called doc stamps) on the deed – This is a state tax assessed for the sale of the property, due at the time the deed is transferred into the name of the buyer. In Miami-Dade County, Florida, for example, it is $0.60 per $100 of the sales price. Thus, if you are selling a property in Miami for $200,000, doc stamps on the deed will cost $1200.
2. Document recording fees – Counties usually require a per-page document recording fee for deeds as well. The new deed being recorded for the mortgage is typically charged to the buyer. However, there is a deed that transfers title out of the seller’s name, and this is generally paid by sellers.
3. Preparation of sale documents – These include the deed, bill of sale, no lien affidavit, and 1099 tax form. In some areas, these documents are prepared by an attorney, while in other cases the title company takes care of this process. Either way, there is generally a fee assessed. This fee is usually called an escrow fee when the paperwork is handled by a title company. Paperwork prepared on behalf of the seller is charged to the seller.
4. Prorations of homeowner association fees and property taxes – the seller will need to pay the part calculated for the percentage of the year that they owned the home.
Since costs associated with closing the sale of a home are often vastly different from state to state and even city to city, it is important to consult with a real estate professional about the closing costs you should expect in your area. Your real estate agent is required by law to disclose all possible fees to you, so they are a great resource for understanding the local regulations that apply for your transaction.
Luxury Real Estate in Southern Florida Brings in-depth market knowledge and the resources of EWM and Christie’s Great Estates, in addition to local expertise and global network access to your real estate transaction. This article powered by SEO 2.0 Services
