Closing costs are an itemized list of expenses such as transfer taxes, title insurance costs, deed recording fees, and much more to prep the property for sale, approve the mortgage and transfer the ownership from the seller to the buyer.
Both buyer and seller have their own share of closing costs that they incur to facilitate the transaction mutually. While closing costs are normatively divided between the seller and the buyer, a lot of times, parties can negotiate that can change the final amount or the net proceeds that the seller receives after the transaction.
What is the average closing cost in Florida?
On average, the closing cost in Florida is around 2% of the total sale price of the property. That means a $300,000 property will cost around $5500-$6000 in closing costs. So what are the numerous closing costs in Florida?
There are 15-16 costs associated with closing in Florida. While a lot of them are paid by the buyer, the seller also contributes by paying a significant share. Here is the list of closing costs paid by the buyer.
Closing costs paid by the Seller in Florida
Following are the closing costs paid by the seller in Florida.
Commission for the agent. Commission for the agent is around 6% of the total value of the property. This is the most expensive closing cost component shared between both parties. Hence, the seller pays around 2.5% of the total commission.
Proration. Property taxes are paid as the prorated amount. The seller is supposed to pay the taxes till the time they own the property. For example, if the seller is going out on 30th October, they are going to pay taxes for the first 10 months. The buyer then pays taxes for the remaining two months. Hence, closing at the end of the year is going to cost more in the prorated tax amount.
HOA Fees. The HOA fee is the fee charged by the homeowners’ association for maintenance purposes. It is important for the seller to clear this before they leave the property.
Outstanding Utility Bills. Before you can sell the property, you should make sure to clear all dues and outstanding utility bills.
Title Insurance. The title insurance protects the owners and the lenders with the help of the owner’s and lender’s policy respectively. Title insurance amounts to a significant closing amount in Florida. You can use this Florida title insurance rate calculator to calculate the price for your policy.
Title Search. A title search is a process of searching through the records in the county office to establish the owner of the property and make sure that the property is free from liens or any disputes.
Municipal Lien Search. This is to make sure that the property does have code violations, sewer or water balances, etc.
Closing costs paid by the Buyer in Florida
Following are the closing costs paid by the buyer in Florida
Home Inspection. The home inspection is initiated by the lender on the buyer’s behalf to make sure that the property is alright and won’t need hefty repairs after purchase.
Home Appraisal. A home appraisal is done to ascertain the market value of the property for loan origination. The home appraisal fee is also paid by the buyer in Florida.
Survey Fee. Surveys could be ordered by the lender in order to make sure that the property does not have any encroachment that could lead to a dispute in the future with the neighbors. The buyer pays the survey fees in Florida.
Credit Report. The lender needs this report to grant a mortgage to the buyer. Generating the credit report costs in the amount that is paid by the buyer in Florida.
Underwriting fee. If the buyer is purchasing with a loan, the underwriting fees will apply. It is also called loan application fees or origination fees interchangeably.
Transfer Taxes. It is the tax collected by the state when the property is transferred from the seller to the buyer.
Recording Fee. After the deal is done and papers are signed, the new deed is made and recorded in the county records. This is called recording the deed and comes with a fee called recording fees.
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