The bundle of fees associated with the selling or purchasing of Real Estate (real Property) are called closing costs. Certain fees are automatically assigned to either the Buyer or the Seller and other costs are negotiable.
Buyer Closing Costs
When a buyer applies for a loan, lenders are required to provide them with a good-faith estimate of their closing costs. The fees vary according to several factors.
Some typical buyer closing costs include:
- The down payment (vary widely).
- Lender Charges. Vary widely, can include points or origination fees, document preparation, underwriting fees, credit report fee etc.
- Prepaid interest.
- Inspection fees. Vary widely and depend on type and size of the property.
- Appraisal Fee. Required by lender, usually $300 to $450.
- Survey. Generally optional and not applicable for condos. Usually $400 to $750.
- Insurance. Varies widely, not applicable to lots. Hazard, flood, wind & hail. Flood insurance is not required unless in flood zone. Regime assesses in condominiums, so a prorated charge at condo closings.
- Title Insurance. Generally $1.75 per thousand dollars based on purchase price plus $75 for lender coverage.
- Attorney Fees. Usually $600 to $850 for Buyers representation.
- Title Search. Usually around $200.
- Hilton Head Island Transfer Fee (applies to Hilton Head Island properties). It is 0.25% of Purchase price.
- Regime/Property Owners Association Assessments. Prorated at closing. Purchaser will credit the seller at closing to reimburse the seller for the prepaid portion of the assessments.
- Real Estate Taxes. Prorated at closing.
Seller Closing Costs
If the seller has not yet paid for the house in full, the seller's most important closing cost is satisfying the remaining balance of their loan. Then, along with any other fees, the original loan will be paid for at the closing before the seller receives any proceeds from the sale.
Other seller closing costs can include:
- Broker's commission
- Attorney Fees. Usually $500 to $700 for seller‘s representation.
- Statutory Recording Fee (deed Stamps). It is 0.37% of Purchase Price.
- CL-100 or Pest inspection. Usually $125 to $250, not applicable for lots.
- Real Estate Taxes. Prorated at closing. Seller will credit the purchaser at closing for the taxes acquiring from January 1 through the date of closing.
- Register of Deeds Recording Fee. Minimal fee usually around $50.
- Regime/ Property Owners Association Assessments. Prorated at closing.
Negotiating Closing Costs
In addition to the sales price, buyers and sellers frequently include closing costs in their negotiations. This can be for both major and minor fees. There's no right or wrong way to negotiate closing costs; just be sure all the terms are written down on the purchase agreement.