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Seller Closing Costs
Most Real Estate contracts used by Real Estate agents will have an area that will need to be completed if not also initialed that pertains to the costs that will be attributed to the Seller and Buyer at the Close of Escrow. We are going to cover just the Seller costs here. Please note that the best approach to this will be for you to contact the Title Company, Attorney or Escrow Service that will be handling this transaction to obtain an accurate list of the fees and their amounts to know the approximate amount it will cost you to complete this transaction.
There are several aspects affecting the final amount the Seller pays to close this transaction. Day of the Month, Month of the Year, Type of Financing the Buyer gets. The type of loans that will normally affect the Seller would be either FHA or VA loans. These types of loans will normally require special property reports, i.e. termite inspections. Where as the majority of the time under conventional financing, termite reports would not be called for unless a “red flag” is raised through the appraisal. Some inspection fees can be paid buy either the Seller or the Buyer. Who pays for them is determined by the Purchase Contract and the Buyers loan program.
note: if you decide to obtain an appraisal before you start showing your property make sure that your appraiser is accepted by your lender or the majority of the lenders in the area. If the buyer wants to use your appraisal in their financing process there will be what is called a “retype fee” associated with changing the appraisal to reference the Lender and not you. I normally see this fee any where between $75.00 to $150.00.
At the time of closing a couple of calendar specific costs will be determined, Property Taxes if you have a Home Owners Assoc. fee and Mortgage Interest. Mortgage Interest is determined for the specific day of the month. Where if you are closing on the 15th of the month you will be charged at least 15 days of interest, probably more like 16 days of interest on the unpaid balance of your loan. Based on my example 16 days is more likely because the closing company needs to get the money to the Mortgage Company. That probably won’t happen until after the transaction closes. If you enjoy the benefits of a Home Owner Association you may have annual or quarterly fees. Whether you pay in advance or in arrears this cost will need to be adjusted so that both the Seller and Buyer pay their appropriate amount. Property taxes in some areas are paid semi annually or annually in arrears. Based on your counties process, this will affect the closing amount.
Escrow and Title fees are standard and for the most part because of competition the pricing is very competitive. The difference here is working with a person and company with experience. The Title policy that the Seller pays for is for the benefit of the Buyer. Just as the owner of your current property provided you with one. The Buyer also purchases a Title Policy to protect their Lender. The Title Policy protects everyone from defects in ownership (the ability to sell or transfer title from a historical perspective). Please note, do not ask these professionals to help you make decisions regarding your contract or ask them to participate in completing the Sale Contract.
If you have questions about fees, contact your preferred Title, Attorney or Escrow Company. Find out what you will be responsible for under different Buyer Financing scenarios and be prepared to negotiate every fee that can be.
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