Your agent or someone you know has probably told you about closing costs. But, do you know everything that they include? Check out our Closing Cost FAQ Page below to find out what closing costs are all about.
Help Me Understand What Closing Costs Are!
Closing costs are the expenses, over and above the price of the property, that buyers and sellers normally incur to complete a real estate transaction.Investopedia
The fees and costs can vary depending on where you live. However, in general, closing costs include, but are not limited to the following:
- Notary fees
- Transfer Costs
- Transfer Taxes
- Appraisal Costs
- Inspection Fees
- Courier Fees
- Administrative Fees
- Commission Fees
- Origination Fees
- Recordings Fees
- Title Insurance
- Underwriting Fees
- Bank Fees
- Wire Transfer Fees
- Credit Report Fees
- Attorney Fees (if applicable)
- Liens against the house will need to be paid to clear the title
- The balance of your mortgage or loans against the house
- Repairs or pest control (if this has previously been agreed upon)
It’s true the buyer typically covers a number of these costs. But, it’s important to realize that the seller usually has to pay 100% of the commission, which is roughly 6%+ of the final sale price. Other than your possible mortgage balance, this is by far the most significant expense since it increases in relation to the sale.
Even though these expenses add up, buyers and sellers alike are taking advantage of the other closing costs during the sale in order to attract interest or negotiate a better deal for themselves.
More and more sellers are attracting buyers by offering to pick up the tab when it comes to the closing costs.
This is a viable strategy. But don’t forget that as a seller, you’ll also need to pay your share of the year’s property tax, up until the day of closing. And, any HOA fees or other community costs should be prorated and paid at this time as well.
What Are Seller Subsidies?
This is an amount that the seller agrees to pay towards the closing costs. For instance, you could offer to put down 3K to go towards your buyer’s costs. In the grand scheme of things, paying these subsidies are often considered a small price to pay in order to attract more buyers to your house.
Can You Avoid These Costs?
In order to avoid these costs, you need to work with a direct buyer! A direct buyer will cover ALL the closing costs! And to make the deal even sweeter, there are NO expensive commission fees when you work with a direct buyer.
What About Repairs?
This is a fair question. The conventional house selling route – even with a fabulous house – often involves some minor repairs, touch-ups, and cleaning.
This is especially the case if an inspection shows that additional repairs are necessary. When this happens, the buyer may make his offer contingent on certain repairs being fixed. So, it’s no wonder you would want to know whether a direct buyer will ask you to cover the cost of repairs and cleaning.
We can’t guarantee this is true for all House Buying Companies. But at Sunshine State Buyers, we strive to offer a win-win deal for everyone involved. And that means NO REPAIR COSTS, NO COMMISSION FEES, NO CLOSING COSTS, and NO HIDDEN EXPENSES.