If you’re thinking of selling your home or property in Florida, then you might be wondering how much the closing costs will be? We’ll try to get into all the details of what you can expect.
- What Are Seller Closing Costs?
- What Are Typical Seller Fees?
- What is Lien Payoff?
- What are Documentary Stamps?
- How Much Are Property Taxes at Closing?
- What is Title Insurance?
- Home Warranty Fees
- What is a WDO Inspection?
- What are brokerage fees?
- What are Closing Fees?
- What are Seller Concessions?
- What's My Home Worth? (FREE INSTANT VALUATION)
What Are Seller Closing Costs?
If you’ve ever bought or sold a home before, you probably remember being dizzied looking at all the costs and fees associated with the transaction. It sounds straight forward that as a seller you’d pay certain costs associated with the transaction, however is it that straight forward and standard? Simple answer… maybe not. There are typical fees associated and known as seller’s closing costs in the state of Florida, however they can be negotiated and some of them paid for by the buyer. Also, builders often charge what is a typical seller closing cost to the buyer (Ever heard a builder say “We’ll pay up to $5,000 of your closing costs for using our lender”? Well what they aren’t telling you that they mean is “We’ll pay up to $5,000 towards what is typically a seller closing cost and none of your buyer closing costs for using our lender” << generous of them right?).
When a home is being sold and generates multiple offers, a savvy buyer’s agent might advise their buyer to pay for some of the traditional seller closing costs to sweeten the deal for the seller.
What Are Typical Seller Fees?
While every real estate transaction is different, there are some fees that we typically see Seller side on a closing statement. Here are some of the typical fees that a seller can expect when selling property in Florida.
- Lien Payoff – The total payoff of all liens placed on the property.
- Documentary Stamps (also known as “Doc Stamps” or a “Transfer Tax”) – A tax paid based on the sale price of your home
- Property Taxes: The seller will have to pay their portion of property taxes for the current year based on the number of days the seller owns the property for the year.
- Title Insurance (also called the owner’s title policy) – purchased for the buyer typically by the seller to protect against any liens popping up down the road.
- Title Search – A fee charged to make sure the buyer of the property can have clean title when they take possession of the property.
- Estoppel Fee – If your property has a homeowner’s association then it may have this fee payable to the HOA to determine payoff and any other fees due.
- Home Warranty – Optionally the seller can offer the new buyer a home warranty as peace of mind for their purchase or sometimes the buyer requests one as part of the purchase.
- Brokerage Fees – The fee paid to a real estate brokerage for services in selling your property.
- Closing Fees – fees charged by a title company for their services in closing the real estate transaction.
- WDO (wood destroying organisms) Inspection – if your buyer is using a VA loan, this inspection will be required by their lender and is typically paid for by the seller.
- Concessions – often times when a buyer is submitting an offer on a property they’ll request that the seller pay part or all of the buyer’s closing costs, these are referred to as “Seller concessions”.
What is Lien Payoff?
If you have a mortgage on your home, then that mortgage will need to be paid off in order to transfer ownership of the property to the new buyer. This also includes any secondary mortgages such as home equity loans. In addition, if anyone has recorded a lien against the property while you owned the lien will need to be satisfied by either having it removed via legal channels or the lien holder paid off. For instance, maybe you had your driveway expanded and you were unhappy with the work and told the contractor they needed to make it right or you weren’t going to make the rest of the payment. That contractor can file a lien against the property and it would need to be satisfied in order to close.
What are Documentary Stamps?
Documentary stamps also referred to as just “doc stamps” or a transfer tax is the tax paid to the state of Florida to “transfer” the ownership of the property from one party to another. It’s the same tax paid in every county with exception to Miami-Dade. The amount paid is $0.70 per $100 based on the sale price of the home. So for example, if the sale price of the home was $200,000 in Marion County the doc stamps would be $1,400.
How Much Are Property Taxes at Closing?
In Florida, property taxes are paid in arrears (meaning you will pay last year’s taxes this year). The seller therefore needs to pay the new buyer for their portion of the property tax for the timeframe they had ownership of the home in the existing year.
So for instance, if the home is closing on April 1st (assuming a non-leap year), the seller will have had ownership of the home for 90 days (31 in January, 28 in February and 31 in March) and thus will need to pay for 90 days of property taxes. Let’s pretend the property taxes are $2,200 per year, to calculate what the seller would owe we would divide $2,200 by 365 to get a daily rate and then multiply that by the number of days the seller owns the home (the buyer always owns the day of closing). In this example the seller would pay $542.47.
A side note: things can change if the closing is taking place later in the year and the property taxes were already paid for the year by the seller. In that case, the buyer would actually be paying the seller back.
What is Title Insurance?
There are a couple different types of Title Insurance; one is purchased to protect the buyer’s lender (typically paid for by the buyer) and the other is what’s known as the “Owner’s title policy” (typically paid for by the seller here in Marion county, however in other counties the buyer pays for this).
The Owner’s Title Policy is an insurance policy purchased typically for the amount of the purchase price of the home and is issued to the buyer at closing. This protects the buyer from issues that may arise down the road.
Between the time a home is contracted and closing, a title examination is performed to check for any outstanding liens and judgement. During this search a “chain of title” is also performed to make sure that title was properly passed from the original owner to the current owner and to make sure the current owner has legal authority to sell the home. In particular chain of title issues can arise when a death of an owner occurs and the estate is settled.
Typical title fees here would be $100-$400.
Home Warranty Fees
To help entice buyers, a seller may choose (or a buyer may ask!) to offer a home warranty on their home. Typical home warranties will cost between $375 and $600 for a one year warranty depending on the level of coverage selected. If your home is otherwise in excellent condition but your hot water heater or HVAC system is aged, this may help entice a buyer to go ahead with a purchase on your home.
What is a WDO Inspection?
A WDO or wood destroying organisms inspection is a required inspection by lenders when the borrower is using a VA loan. It is typical that the seller agrees to pay for this inspection. It checks for termites and also other wood destroying organisms. The cost of this inspection ranges from $75 to $125.
What are brokerage fees?
When you hire a real estate professional to assist in the sale of your property, you’ll typically pay some sort of a percentage based commission to the broker of the agent selling your home. There is no industry standard for this commission and it is negotiable between you and the agent you hire. The fee is generally split evenly (but again, it’s a negotiated item) between the agency that you list your home with and the agency that procures the buyer of your home.
Let’s say you negotiate and agree to list your home with an agent for a 6% commission split evenly between the buyer’s broker and your agent’s broker. Your home sells for $205,000. The total commission for the transaction owed would be $12,300. Each real estate brokerage would receive $6,150 at closing and from that fee the broker would then pay their agents.
The real estate commissions involved pay for professional photography (if your agent is using an iPhone for your pictures, you’ve hired the wrong agent!), professional marketing, social media expenses, post card mailers, signs and websites.
While commissions are negotiable, shopping for the “lowest price” isn’t the best value in real estate. There is a difference and the old adage applies: “You get what you pay for!”. Your real estate professional should be someone willing to fight for your best interests.
What are Closing Fees?
Closing fees are charged by the title company and both buyer and seller typically have this fee. It pays for the title processor and closing agent to perform all activities related to the transaction. Typical seller side closing fees range from $300 to $800.
What are Seller Concessions?
Quite common in a real estate transaction a buyer will make an offer on a property and request that the seller pay all or part of their closing costs. This seller paid cost is referred to as a “seller concession” given to the buyer at closing. This a negotiable item at the time you’re negotiating the offer. Sometimes the buyer needs the help in order to be able to afford the home, other times the buyer just wants the help so they can keep more money in their pocket to do upgrades on the home after closing or just to have a sufficient emergency fund in place. A good listing agent will help you decide the best course of action to make sure you net what you need to and still seriously negotiate every offer on the table.