Typical Closing Costs

If you are selling a home in Clay County you should know what the costs involved with closing your sale may be.  I’ve learned a lot in my 10+ years in the real estate industry and not the least of which is “Real Estate surprises are never fun” especially when they involve an unexpected out lay of cash! Don’t let yourself be surprised by a cost you are not expecting. The worst thing I can imagine is a homeowner expecting to net a certain amount of funds at closing and missing that mark by 100s or possibly 1000s of dollars. Or even worse – having to bring a cashier’s check to closing.

When I first speak to someone considering the sale of their home, most of the time they believe that the sales price of their home minus their mortgage balance minus the real estate fee will be good estimate of what they will net at closing. There are, however, additional closing (settlement) fees to be aware of. We will examine some of these costs below. The information below is for informational purposes only. This is not an all-inclusive list as there may be a few unique situations out there. However, this list is fairly comprehensive.

*  It is also important to note that depending upon which type of financing the buyer for your property is utilizing there may also be fees that the buyer may not absorb as a condition of their loan. Those fees may fall to you at closing.

Documentary Stamps Tax (Deed)

Documentary stamp tax is levied at the rate of $.70 per $100 (or portion thereof) on documents that transfer interest in Florida real property, such as warranty deeds and quit claim deeds. To determine the amount of the Stamps Tax you would multiply your sales price by .007.

Example: sales price of $200,000 x  .007 =  $ 1,400

Attorney / Settlement Fee

This fee varies from one settlement company/firm to another. Most often we see this fee ranging between $250 and $450.

Home Warranty Plan

Protection that covers (to a degree) the mechanical, electrical, plumbing, heating systems, and appliances of a home. We see more and more buyers requesting that the seller provide a 1-year Home Warranty Plan at closing. Although providing a Home Warranty Plan is completely negotiable, many home sellers agree to provide the plan to secure a purchase agreement. There are a wide variety of Home Warranty Plans and they often run between $395 and $550 depending upon the extent of the plan’s coverage and the fee to the buyer for a service call after closing.

Recording Fee for Satisfaction of Your Mortgage

A satisfaction of your mortgage will be recorded with the Clerk of Courts. The recording fee is approximately $25.

Property Survey

The purchase of the property survey is negotiable; however, it is typical in Clay County for the seller to provide an existing survey or a new stake survey at least 10 days prior to closing. A Survey can range in price depending upon the size of the property to be surveyed. You can count on a survey for a property located in a developed subdivision to have a cost of approximately $350. A flood elevation certificate is not part of the survey. The Northeast Florida Association of Realtors Purchase and Sale Agreement states that if a surveyor’s flood elevation certificate is required, the buyer shall pay for the certificate.

Tax Pro-ration

At closing the settlement firm/company will collect for the seller’s portion of the taxes pro-rated for January 1st through the closing date based upon last year’s taxes unless this year’s tax bill has already been released. The amount of tax that this represents will be deducted from your proceeds and credited to the buyer at closing. The buyer will be responsible for paying the tax bill when it comes due. If the tax bill is already available or has already been paid the buyer will credit you at closing for the tax that would be attributed to their ownership. A calculation to determine your tax pro-ration would be: Yearly tax ÷ 365 days x # of days you own the home.

Example: Assume a closing on March 31st.

Yearly tax $1,200 ÷ 365 = 3.287671232876712 x 90 days (Jan 1 through March 31) = $295.89

Title Examination, Search & Liens

These fees include the actual cost incurred by the settlement firm/company in procuring the title search (history of the ownership of your property) and for the examination of the search. These fees are typically $175 – $200. If there are outstanding liens against your property they should show up in this search and you will be required to pay/satisfy those liens prior to closing.

Owner’s Title Insurance

This figure is a one-time premium for an insurance policy that protects against defects in or liens or encumbrances on the title, which may affect the marketability of the property.  The owner’s title insurance is a seller fee and is calculated at .00575 x each $100 or portion thereof for the first $100,000 and .0050 x each $100 or portion thereof in excess of $100,000. For example if you are selling a home for $200,000:

First $100,000 x .00575 = $575

Second $100,000 x .0050 = $500

$575 + 500 =  $1,075 would be the cost of the Owner’s Title Insurance

 Septic Inspection, if applicable

If your property is on a septic system a buyer is likely to want a septic inspection and typically pays for it. Some buyers may want to negotiate that the seller cover the cost of this inspection.  You can count on a septic inspection costing approximately $400.

*** Be careful, if your buyer is financing through VA or FHA and your home has a septic system but sewer lines run to your neighborhood/property you may be required to connect your property to the sewer system. This can be extremely costly. If your home is on a septic system you should find out if sewer connection is available at your property and discuss this with your agent prior to listing your home for sale.

Wood Destroying Organism (WDO) Repairs

If WDO repairs are necessary, the responsibility for payment of those repairs is generally negotiated once inspections are complete. Most typically the seller pays for these repairs and costs would depend upon the scope of the damage.

Other Repairs

After a buyer has inspected the property, there are usually at least a few repair items that the buyer asks the seller to repair/replace/treat prior to closing. They must submit a written request to the seller along with a copy of all written reports of inspections and investigations. The buyer and seller then have 5 days to come to an agreement for repairs/replacements/treatments. That is not to say that the seller has to agree to the buyer’s request. However, most sellers would rather make a few repairs than lose the sale of their property. The costs involved with this will depend upon any agreement made with the buyer and the scope of work agreed to. The costs for repairs are generally paid prior to sitting down at the closing table. They are costs none-the-less and you should be prepared in case the request is made.

Brokerage Fee

The brokerage fee is the fee you have agreed to pay your broker for listing, marketing and selling your home. Most often this fee is the form of a percentage of your home’s sales price. To calculate this fee you would multiply the sales price by the agreed fee in the form of decimal.

Example:          $200,000 (Sales Price)

X .06 (6% Brokerage Fee)

$12,000 (Brokerage Fee to be Paid)

Broker Only Commission

Many real estate brokerages charge a one-time fee that goes directly to the brokerage. Typically this fee is between $195 and $450.

Homeowner / Condominium Association Fee (if applicable)

If your home is a part of a homeowner’s or condominium association you pay a fee monthly, quarterly, or annually to be a part of that association. At closing this fee will be pro-rated with the seller paying the portion of the current fee for the length of time they have been the owner. For example, if you’re in an association that has a $200 annual association fee and your closing is June 1st, you were in possession of the home for ½ of the year making you responsible for $100 of the fee. If you paid this fee January 1st the buyer will credit you $100 at closing for the remaining 6 months of the year that you have already paid for in advance.

Homeowner / Condominium Association Estoppel Letter

Your closing firm/company ensures that you are current on Homeowner or Condominium fees prior to closing. They do this by requesting an estoppel letter from your association. This letter can take from a few days to several days to receive. Make sure your real estate agent has the name, contact information, and your account number for the association (copy of your association coupon) so that they can make sure the estoppel letter is ordered early enough so that you are not charged rush fees for the letter. This fee generally ranges from $195 to $400. There may be an additional fee to have the letter ‘rushed’.

Courier & Miscellaneous Fees

Your closing firm/company may have to courier or wire items as a part of closing i.e.; your loan payoff, closing documents if you are out of the area and will not physically attending the closing, wiring your net proceeds if you would prefer to have access to your closing funds immediately rather than waiting for a cashier check to clear your bank account, etc. They don’t pay this for you; they will charge you the actual fee at closing. Depending upon your needs count on between $60 and $150 in fees.

Seller Contribution to Buyer at Closing

It’s become the norm for buyers to ask the seller for assistance in paying their closing costs, at least with financed purchases. If you are lucky enough to get a cash offer on your property you probably will not have to deal with this. Most financing options will allow a seller to pay a maximum of 6% of the sales price towards the buyer’s closing costs (4% for VA Loans). Buyer closing costs generally run between 4% and 6% of the purchase price. If you agree to pay all or a portion of the buyer’s closing costs please consider having your agent use the term “up to x% total towards buyers closing costs and or pre-paid expenses” when agreeing to this contribution in a Purchase and Sale Agreement. Most buyers’ agents will write a statement something to effect of: Seller and Buyer agree that Seller shall contribute 6% to Buyer at closing. This is great for the buyer if their closing costs are only 4% of the sales price as they will receive an additional 2% win fall from you! If you use the term “up to” the closing firm/company can only charge the actual costs to the buyer for their closing costs and pre-paid fees up to the amount you and the buyer agree to.

Final Walk-through Issues

A Purchase and Sale Agreement usually includes a provision that allows the buyer the opportunity to do a final walk-through prior to closing to ensure that the property is being delivered in the same condition it was at the time they contracted for purchase. This is not an opportunity for the buyer to re-inspect the property but rather to verify that the equipment being conveyed with the property is there, that there has been no damage to the property or equipment, and that the systems are functioning as they were at the time they contracted to purchase the property. If equipment is missing, items are not functioning, or there is property damage this will need to be taken care of prior to closing.

Other costs may include hiring an attorney to review your purchase and sale agreement or attending the closing. Legal representation can vary quite a bit. As a general rule of thumb the costs for legal representation in a Real Estate sale can vary anywhere from $300-$1500 depending on the scope of work.

Having a lawyer represent you is never a bad idea. Real estate agents are NOT allowed to council buyers and sellers in legal matters. This goes beyond the scope of a non-attorney. If you are unsure of something in a purchase and sale agreement a Real Estate agent is not supposed to give you legal advice.