The typical seller believes that once they pay off their loan and pay their Orlando Realtor whatever commission was agreed upon then they get the rest of what’s leftover. Very few homeowners give much thought to closing costs. When we say closing costs, we are referring to all the taxes, fees, and costs that are necessary to close a real estate transaction.
In the state of Florida, closing costs are usually split 50/50 between buyer and seller. However, like my 1st real estate teacher told me “everything in real estate is negotiable”, so nothing is set in stone when it comes to a real estate transaction. Hopefully, you’ve hired an experienced Orlando Realtor who is also a tough negotiator.
Your agent should be able to tell in advance what you should expect to pay on the day of the closing. Once you have all the pertinent information, you will easily be able to calculate what your net proceeds will be.
Like I said before, it’s typical in the state of Florida for both buyer and seller to pay equal shares of the closing costs. Sometimes the market can dictate who pays for what depending on if it’s a buyers or seller’s market. For example… If it’s a seller’s market, the seller may require the buyer to pay a larger portion than usual. By the same token, if it’s a buyer’s market, the buyer may require the seller to pay the lion’s share of the closing costs… or even all the closing costs.
From our experience as realtors in Orlando, it’s very common for buyers to include all of their closing costs in their offer so that they don’t have to come out of pocket at the closing.
These are some typical closing costs on an FL real estate transaction:
- Escrow Fees: In Florida, it’s not required for a lawyer to handle the closing of a RE transaction. Title companies [sometimes owned by attorneys] are usually the ones who handle closings as well as any escrows. These fees are typically shared equally by both parties.
- Title Insurance: There are 2 types of title insurance that must be purchased, the owners’ policy and the lenders’ policy. The seller is typically responsible to pay the owners’ policy and the buyer is responsible for the lenders’ policy. Both these policies are in place to protect the lender as well the lender as well as the new owner by making sure there are no liens or other encumbrances attached to the property aka “clearing title”.
- Transfer Taxes & Documentary Stamps: These are fees that are paid to the city, state and county in which the property is located in. This is where Uncle Sam gets his cut of the deal and is also referred to as a reconveyance tax.
- Recording Fees: This is a fee paid to the county for recording the deed to the property making it official.
- Mortgage Tax: This is a tax collected by the state of Florida.
- Settlement Fees: Also usually shared by buyer and seller. This is the cost that the title company charges to handle any of the financial transfers which occur during the transaction.
- Brokers Commission: This is the fee that the seller agreed to pay his Orlando listing agent for selling the home.
- Pest Inspections: Lenders usually require for a pest inspection to be performed on the property to make sure that it’s in good condition and hasn’t been damaged by any living organisms. If the report reveals that there is evidence of termites, carpenter ants, fungus or dry rot, the seller will usually have to correct the problem before closing the transaction. The seller will usually pay for this directly to the company making the repairs which means it won’t appear on the settlement statement.
Buyers will typically be responsible for additional fees which are mostly tied to their mortgage loan. Sellers are also responsible for some additional costs like the mortgage interest on their loan, unpaid property taxes, unpaid association dues, hazard insurance, etc. The seller is responsible to pay these fees up until the closing of the transaction… and the buyer from then on. If the seller has already paid for some of these items past the closing date, they will be reimbursed at the closing. Other miscellaneous items like home warranties that the seller may have agreed to pay for will also be deducted from the seller’s proceeds.
