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Selling Your Home? Don't Be Surprised by Closing Costs
Selling your home can be a profitable venture, particularly if you invested a large down payment, have built up equity, updated the home as needed, and have benefited from rising market values here in Florida. But it isn't as simple as getting a check from the buyer, paying off what you owe and pocketing the rest. There are costs associated with selling, and it's important to familiarize yourself with them so that there are no surprises at the closing table.
Most of a seller's closing costs are based on the sales price of the home, and some costs may vary depending on where you live. Our REALTORS® can help you estimate costs based on an expected sales price. Doing those calculations at the start of your sales process will help you evaluate offers with complete information. Here's a list of typical closing costs for sellers:
- Your Mortgage
Typically the biggest expense at closing is paying off your mortgage. Call your mortgage company and ask for a pay-off balance. Your monthly statements likely include the current loan balance, but the amount you actually pay will vary slightly since interest accrues daily. You'll also need to pay off any second mortgages or home equity loans at the time of the sale. - Real Estate Commissions
The agent who listed and tirelessly marketed your home, made beautiful flyers and web listings, set appointments, held open houses, managed negotiations and all of the paperwork to get you to the closing table gets paid by you at closing. The standard commission nationwide is 6 percent, which is shared with the buyer's agent. On a $300,000 home, that's $18,000. The commission is deducted from the seller's proceeds. - Transfer Tax
The seller typically pays the cost of transferring the title to the new owner's name. The cost for this in Florida is $77 per $1,000, so with our $300,000 home example, you would pay roughly $2,300 for this line item. - Title Insurance
Title insurance protects the buyer from any unforeseen problems, like unpaid contractor's liens or problems with prior document filings. In Florida, the cost on our $300,000 example would be $5 per $1,000 or $1,500. Some Florida counties make this the buyer's responsibility, so you'll want to ask your agent to help clarify this based on where the home you are selling is located. - Other Costs
Since property taxes are typically due at the end of the year, you'll need to pay your pro-rated property taxes from January 1 to the closing date. This amount goes to the buyer as a credit at closing, reducing what they pay, however they will be responsible for the entire year's property taxes when they come due. The same goes for any Home Owner's Association fees that are paid in arrears. Note that if you pay into escrow for your property taxes and your mortgage company takes responsibility for them, you will receive a refund for the taxes from your mortgage company about 30 days after you pay off your loan. - Agreed Upon Improvements or Credits
If during the contract negotiations you agreed to purchase a home warranty for the buyer, offered to pay a portion of their closing costs, or agreed to a carpet allowance or other credit, this payment will also occur at closing.
Now that you have a clearer picture of what expenses you can expect to pay to sell your home, it's time to hire a great agent and get started. Contact Wagner Realty, one of the most respected real estate companies in Manatee and Sarasota Counties, to get an expert agent working for you.
