Seller Closing Costs: What Can I Expect?
Selling a house is not a simple process, and there are a lot of moving parts involved. From choosing a broker to represent you to negotiating an offer to closing day, nothing will go according to plan, and it is important to minimize curveballs as much as possible. When homeowners have a price in mind they want to net, you must account for paying commission to your realtor, but there are also several costs associated with the closing that you will be responsible for. The bulk of these will be paid by the buyer, but the last thing you want is to be sitting at the closing table, caught off guard by the closing costs you need to pay. Closing costs can vary from state to state, so let’s take a look at what you can expect in the state of Illinois.
Mortgage: Varies
The most obvious cost which you most likely have accounted for is your mortgage. If you are lucky enough to own full equity in your home, good for you. If not, you will be required to pay your mortgage at the time of closing, in addition to the interest that will be prorated to closing day. Often, any line of credit given to you by the lender will also need to be paid off, as well as any liens that the lender attached to your property.
Commission: Varies
Another expected charge, if you have employed a real estate broker to sell your home, you will be charged commission by their brokerage firm. Most often, this is a percentage of the sales price, but there are other commission options as well. Once your home closes, the agreed upon commission will be split between the buyer and seller firms, and the funds will be disbursed to listing and buyer agents that were responsible for the sale. Usually the agents will not receive 100% of the sales commission and the firm will take its cut off of the top. There is no fixed commission rate, and different firms may have different rates or their rates may be negotiable. Don’t choose a firm based solely on the lowest commission, as often these firms may not have the same resources or experience as a firm that charges a higher commission. You get what you paid for.
Courier Fees: $50-75 per payoff
As you pay off your mortgage, you will be charged a wiring fee by the lender, which generally cost between $50-75 per wire.
Title Examination: $200-400
When your home is on the market, public records will be examined to check for any outstanding liens or other issues with the title that you may not have been aware of. Occasionally claims can be made against the property without your knowledge. In addition to the current title examination, a chain of title is also performed, checking the whole history of ownership of the house, to make sure that it has been sold and transferred successfully and without any issues. It is important for the buyers to adopt a clean, “marketable” title. The fee to run these checks is typically between $200-400.
Title Insurance: % of Price of Home
Once your title has been examined, you will obtain title insurance, to verify that your title was examined and declared clean at the time of closing. That way, you will be protected against any future claims. This fee is usually split between buyer and seller and can be negotiated.
Closing Fee: $500-800
The title company will generally charge you a fee for completing the closing, and this price can vary based on the company you use. This is another fee that can be split or negotiated between buyer and seller.
Documentary Stamp Tax: Varies Depending on City and Home Price
Another name for this is excise tax, where the state of Illinois charges the seller to transfer ownership of the property. This can vary depending on the city you live in, but as an example, in Highland Park the tax is $5 per $1000 of sales price. If you sell your home for $700,000, the stamp tax here will be $3,500.
Property Taxes: Prorated
In Illinois, property taxes are charged for the previous year. So when you receive your bill, you are paying for the previous year. If you sell your home on May 15th, you won’t receive a property tax bill for that year, and will be required to credit the prorated amount for the current year to the buyer.
Buyer’s Closing Costs: Negotiated
Buyer’s typically shoulder the brunt of the closing costs, and will most likely ask you to help them pay for some of these costs, an element they may work into their offer. For example, the buyer may offer you your asking price, but ask for a certain percentage of the closing costs. Do your research on what these costs are likely to be as well as your finances to determine if this is a beneficial deal for you. If not, it is always negotiable.
Home Warranty Fees: $375-600 (Optional)
If you are selling an older home and don’t feel like replacing everything, home warranty could be a strong selling point to help protect your buyer against problems after they move in. You are not required to pay for this but it can certainly strengthen your offer and show goodwill towards your buyers. The price for one year of coverage varies but generally falls between $375-600.
Pest Inspection: $100-250
Depending on the type of loan, with VA loan you as the seller may be required to pay for a pest inspection before selling, which generally costs between $100-250.
Although you are the seller, clearly closing costs can add up, and may be the ultimate difference in you walking away from a sale with all your bases covered or being in a tighter financial situation than you expected. When discussing listing price or negotiating an offer, remember to factor in all the closing costs you can expect to pay. Discuss your financial situation with your realtor. If you want to walk away with the best deal possible, call Delphine Nguyen of Baird and Warner today to hear how she can help you sell your house for top dollar.
Post a Comment