Closing Costs: What to Expect

Selling a home can mean a huge profit for some sellers. However, the difference between your mortgage balance and your selling price is not all profit. You have to think about closing costs, which can account for as much as 10% of the sale price.

Closing costs include several main expenses. Here’s a look at them in detail.

Agent Commissions

Unless you’re selling the home on your own, you likely hired a real estate agent. They will want their cut once the house is sold. This cut comes in the form of commissions. In the past, a 6% commission was split between the listing agent and the buyer’s agent.

However, that has changed. New rules now allow buyers to decide how much to pay their agents and will sign written contracts. When they make offers, buyers can ask sellers to pay the buyer’s agent commission at closing.

Title Insurance

Prior to a sale, a title search is done to verify ownership of the property. While this search is typically thorough, title insurance protects the lender or home buyer if unexpected ownership claims arise later.

There are two types of title insurance. One policy covers the lender, and it is usually required for the mortgage loan to close. There is also the owner’s policy, which covers the home buyer, but this is optional.

Taxes and Fees

There will also be filing and recording fees as well as transfer taxes. These are all determined by local or state jurisdiction. Sellers will often be required to pay the property or deed transfer tax. Taxes and fees are generally not negotiable, but a buyer may be willing to take on more of the fees in a hot market. Property taxes and any homeowner association fees will likely be split with the buyer.

Seller Concessions

In a buyer’s market, the seller may need to pay some of the closing costs. This is referred to as a seller concession. A common concession is covering the cost of necessary repairs found during the home inspection. However, seller concessions may be limited by the type of home loan the buyer is using.

Other Considerations 

Keep in mind that your profits will likely need to be used to pay off your current mortgage. If you have a home equity loan or line of credit, that will need to be paid off as well. In addition, any liens or judgments against the property will have to be paid before it can be sold.

 Seek Legal Help

Closing on a home can be exciting, whether you are the seller or buyer. However, there are many documents and costs involved, so keep that in mind.

There’s a lot that goes into the closing process. Get the help you need from Fort Lauderdale closing lawyer Edward J. Jennings, P.A. We’ll help you stay on track so everything goes smoothly. Schedule a consultation today by calling 954-764-4330 or filling out the online form.

Source:

nerdwallet.com/article/mortgages/closing-costs-home-seller