What are my closing costs when I sell my home?
This is a common question we are asked when homeowners are considering selling their property. Knowing what your closing costs are, along with your homes value, helps you know what your proceeds will be when you sell. Let’s clear up some of the confusion about closing costs.
For Sellers, there are certain closing costs that must always be paid when a transaction occurs, however who pays them can be negotiated in the contract. Even though who pays what can be negotiated, most costs are customarily paid by a specific party and those customs can vary by location. We will discuss below what some of these costs are and who typically pays for them in the Nassau County Florida market.
Real Estate Commission
This is almost always paid by the Seller in the transaction. The commission is a percentage of the final sales price and can vary based on the situational needs to market the property. The most common fee we charge locally is 6% of the purchase price. The commission charged will be determined up front in the listing agreement between the Seller and the Broker.
This closing cost, also commonly referred to as ‘Doc Stamps on the Deed’, is a required tax that is paid to the state of Florida on every Real Estate transaction. Again, this fee is almost always paid by the Seller and can be calculated by multiplying the sale price of the property by .007. For example, a $350,000 property would have a transfer tax of $2,450.
This is the fee charged by the Clerk of Court to record the Deed transferring ownership of the property. According to the Nassau County Clerk of Court the current charge is $10 for the first page and $8.50 for each additional page. Commonly, we see deeds in the range of 3-4 pages. This is a minimal closing cost, but again, required for the sale of property.
Title Insurance is used to protect the interest in a property from others making a claim of ownership. It is issued in almost all transactions (certainly always recommended) and is required if there is a lender involved. There are several different title insurance underwriters and, as an example, we calculated an estimate from First American of $1825 for a property at a value of $350,000. Depending on the property and if there is a lender involved, there can also be a series of endorsements (or add-ons) to the standard policy that would affect the total rate. The party that pays for the cost of the Title Insurance policy can be negotiated in the contract. Commonly in Nassau County Florida the Buyer pays for the Title Insurance but it isn’t unusual for it to be negotiated to the opposite. However, whomever pays for the policy typically chooses the Closing Agent that will handle the close of escrow and order the Title Policy.
Closing Agent Fee
This is the fee that the Closing Agency (whether Title Company or Attorney) charges to process the transaction and handle the close of escrow. Fees can vary between companies and in Nassau County Florida commonly fall within the range of $400-$500. While either party can pay the entire fee it is often decided in the contract to split the fee between the Buyer and the Seller.
The amount of the property tax is determined each year by the Nassau County Tax Collector. The total tax bill is then prorated for the portion of the year that the Seller has owned the property and that amount is collected at the time of closing. Should closing occur during the latter part of the year when the tax bill has already been paid, the prorated would work in reverse where the Buyer reimburses the Seller at the time of closing for the portion of the year they will own the property (the day of closing through the end of the year). We are often asked by Sellers who escrow money with their lender for taxes why they pay the tax bill at closing. It is done at closing to settle the transaction, once the transaction closes and the lender is paid in full they will send a refund check for the funds in the escrow account.
If the property is located in an area with a Homeowners Association or a Condo Association, those fees will be prorated in the same manner that the property taxes are. The Closing Agent will request a statement from the management company (called an Estoppel Letter) to determine the financial status of the account. They will use that information to make the appropriate proration on the closing statement, either collect from the Seller or reimburse the Seller for prepaid items.
In addition to the standard items above there are often costs incurred to the Seller during the negotiation of the sale. Any negotiated items would be included on the contract and could include things like Repairs or Closing Cost credits for Buyers. Before agreeing to any negotiated concessions it is important the Seller understand exactly how much those items cost. Make sure to ask your Realtor for an estimate.
There is one more thing to consider when calculating your costs to close and that is your mortgage payoff, if you have one. The actual payoff number is typically higher than what you see as your remaining principle balance. This is because mortgage payments are paid in arrears and there is the current months (to the closing date) worth of daily interest that is included in that balance. The Closing Agent will get an exact payoff from the lender.
The above information is meant to help Sellers understand what costs are incurred with a sale as well as a rough estimate of the amounts. Our Century 21 Associates will provide a Sellers Cost Estimate specific to your property and situation before you enter into an agreement to sell your home. Contact Us to begin the process.