When selling your home, you know there will be closing costs, yet do you have any idea what the costs will amount to and by how much they’ll reduce your profit when it’s time to sell your home? I’m sure you want to know how much money will be wired to your bank account. The more, the better, of course! This is a common question that I field from homeowners as they get ready to sell their homes; How much will it cost me to sell my home? What are the costs to selling a home?
You will know what to expect when you sell a home by reviewing your closing costs, commonly referred to as Settlement charges, which can and will vary from state to state, so what you see here in South Florida, may not be common place in another state. Ideally, you’ll review the settlement statement (HUD-1), regulated by the U.S. Department of Housing and Urban Development (HUD) several days prior to closing. On the HUD-1 , you’ll find the itemized charges for both the Buyer and the Seller which is the official settlement form used for the purchase and sale of Real Estate. You can expect to find the following most common charges:
The most common settlement charges (closing costs) we’ll discuss here:
Settlement/Closing Fee – This fee is charged to both the Seller and the Buyer. This fee can average anywhere from $400 – $900 and the amount paid will vary amongst Closing Agents for the settlement/closing service provided. This is the fee charged by the Closing Agent who will process your closing. This is meant to simply provide a rough estimate.
Abstract or Title Search fees – These charges are for the process of examining who has interest in or claim to the property being sold and what might be attached to the property. This examines the ownership history of a home. This fee can average between $200 – $300.
Attorney Fees – If you are being represented by an Attorney, you’ll have to pay the fee for their services. (contact your Local Attorney for cost estimates, if using).
Title Insurance – Here in Southeast Florida in the county of Broward, it is standard for the Buyer to select the Title company for closing and therefore pay for Owners Title Insurance. In the county of Palm Beach, it is standard for the Seller to select and pay. Of course, as I say “standard” this is a negotiable term of the Real Estate Purchase Contract.
State Recording Stamps on Deed – You will pay .70 per $100 of the purchase price.
Lien/Municipal Search fee – This fee varies from approximately $150 – $225.
Recording Fees – You can expect this fee at about $27.
Document/Courier/Wire fees – Can average $100.
Homeowners Association Estoppel Fee – If you live in a neighborhood that has a Homeowners Association, you will pay an Estoppel Fee which is an accounting ledger of what is owed on your account, if any. The fee for the Estoppel letter can average between $150 – $350, for example. The Estoppel letter will detail your account balance whether monies are owed or not.
County Property Taxes – You will pay the taxes from January 1st through the day of closing which the Buyer receives in the form of a credit.
Brokerage Commission Fees – Realtors commissions are typically paid from the Seller’s funds at settlement. The standard fee is 6%. A skilled, trusted Real Estate professional that you hire should be well worth the commission that they are paid making the difference in you selling your home for top dollar or not; it’s that simple. You need to feel comfortable knowing that they’ve got your back.
Seller Contributions – Also, should the Buyer request Seller assistance for closing costs, this cost will appear on your settlement statement/HUD as a closing cost credit to Buyer which can range from 1% to 6% of the purchase price. This cost is optional and not a requirement of closing, yet shown here as something you may consider in the selling of your home.
The costs listed above are your most common costs that you’ll incur when selling a home. It is not meant to be all inclusive or a representation of exact costs. This simply shows a guideline for you to have an idea of what to expect. Knowing what to expect prior to selling your home, is always beneficial, as most don’t like surprises, particularly when it comes to money! When considering Realtors to sell your home, you’ll want to make sure that they go over a Seller’s Net Sheet with you that will highlight the costs that you can expect to pay and when you add in any mortgage balances, you’ll know how much you’ll be profiting from the sale of your home.