B4 • Friday, July 8, 2022
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What are closing costs for home sellers? ready to pay for their time, however. Attorney fees can range between $150 to $500 per hour for a good lawyer.
Ben Mizes WEALTH OF GEEKS With the current seller’s market, along with high demand and loe inventory, many homeowners are dabbling with the idea of putting their house up for sale. But beware - if you’re ready to find an agent and list your home for sale, there are many hidden fees involved with selling a home that you will want to be prepared for ahead of time. You want to avoid surprises in the home-selling process and understand the ins and outs of closing costs for sellers - from what’s included to how to negotiate a better deal. For starters, closing costs are the various fees paid - some by the buyer, some by the seller, in order to finalize the home buying transaction. Many people are aware of closing costs for buyers but may not realize what is entailed in sellers’ closing costs. Here are a few fees for homeowners to watch out for as they prepare to close on a deal.
Outstanding bills and liens It is up to the seller to pay for prorated items such as property tax and utilities. The seller usually must pay these up to the sale date, at which point the buyer takes over the costs. Sellers will also be responsible for outstanding judgment or liens on the property before moving forward with the deal.
BRANDPOINT
Closing costs are the various fees paid in order to finalize the home buying transaction. Many people are aware of closing costs for buyers but may not realize what is entailed in sellers’ closing costs. split, it’s pretty common for the seller to cover these costs. These taxes are usually represented as a percentage of the final sale price and vary by state and location. Title insurance
A title insurance policy protects its owner from disputes about homeownership. The most significant cost that There are two types of title inhome sellers are responsible for is agent commission fees. Commissurance - lender’s (which protects sion rates are usually around 5-6% the lender) and owner’s (which of the final sale price, split between protects the owner). Buyers are exthe buyer’s and seller’s agents. pected to pay the lender’s title polTherefore, on a $300,000 home, icy, which is normally required for commission fees could total anyone who is receiving a mort$18,000. gage. However, the question of who pays the owner’s title insurance deTransfer tax pends on the state where the propOnce you officially transfer own- erty is located. ership of a home, the state, county, Escrow costs and/or city where the property is The escrow process begins located will charge taxes and fees. Although sometimes these fees are when a buyer makes an offer on a Agent commission
Average long-term US mortgage rates retreat this week ASSOCIATED PRESS WASHINGTON — Average longterm U.S. mortgage rates eased again this week as the Federal Reserve remains likely to raise its benchmark borrowing rate in its ongoing battle to bring down inflation. Mortgage buyer Freddie Mac reported Thursday that the 30-year rate fell to 5.30% from 5.70% last week. One year ago the average 30-year rate was 2.90%. The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, fell to 4.45% from 4.83% from last week. A year ago, the rate was 2.26%. The Federal Reserve raised its benchmark rate last month by three-quarters of a point, the biggest single hike since 1994. In notes from its meeting released Wednesday, Fed policymakers signaled that much higher interest rates could be needed to reign in four-decade high inflation. They also acknowledged that their rate hikes could weaken the economy, but suggested that such steps were necessary to slow price increases back to the Fed’s 2% annual target. The Fed’s unusually large rate hike came after government data showed U.S. inflation rose in May to a four-decade high of 8.6%. The Fed’s benchmark short-term rate, which affects many consumer and business loans, will now be pegged to a range of 1.5% to 1.75% — and Fed policymakers forecast a doubling of that range by year’s end.
home. The “good faith deposit” or “earnest money” amount shows they are serious about purchasing the property and are deposited into an escrow account controlled by an impartial third party. This impartial third party, aka the escrow company, charges a fee for their services in setting up escrow. Typically, these fees are split 50-50 between buyer and seller and vary depending on where the property is located. Attorney fees Real estate transactions are complicated, and a seller’s attorney will help them wade through the paperwork and ensure they do not fall victim to any loopholes. Although buyers and sellers are not required to hire an attorney in some states, it is still a good idea to hire one to look over the final contract. Please make sure you are
And they will also have to pay off the remainder of their mortgage and accrued interest to move out officially. All of these costs can add up quickly, so it’s important to track your spending and try to stick to a budget. How to lower your closing costs
Home sellers can take several avenues to save money on their closing costs, especially in a seller’s market. When there are low inventory and high demand, How to calculate closing homeowners have more leverage costs in the negotiation process and may The average closing costs for even ask the buyer to cover certain sellers range between 8% to 10% of costs. In fact, sellers can refuse to the final sale price once all is said pay closing costs if they think they and done, so it’s important to faccan get a better offer from another buyer. tor these funds into your overall However, covering a portion of moving budget. Moreover, these your buyer’s closing costs doesn’t costs fluctuate depending on necessarily have to be a bad thing. which state the seller lives in and are heavily influenced by local reg- Under the right circumstances, it could help save a seller money in ulations and laws. For instance, in Florida, it is cus- the long run if a buyer’s overall oftom for the seller to pay for the fer is strong enough. Some things bulk of the closing costs to finalize to consider when deciding whether the deal and bear most of the finan- to pay closing costs include: Offering price : Higher offers can cial burden in this sense. offset the cost of paying a buyer’s Sellers usually receive a bigger closing costs. payout in Florida, however, beOdd requests : The fewer contincause property prices are higher. On the other hand, in Alabama, for gencies a buyer has, the better example, the closing costs are tra- chance a seller has for the deal to go through ditionally split more evenly beClosing date : If a buyer wants to tween the buyer and seller. close quickly or is flexible with Sellers should also take additional costs, such as home repairs their closing date, this could beneand mortgage payoffs, into account fit the seller. As this seller’s market when calculating how much they continues to build, some experts will pay to sell their home. are predicting a housing market Sellers will often make cosmetic crash. All the more reason to be on or even structural enhancements top of things, and prepared to sell to a property before putting it up your home quickly if the opportufor sale to attract buyers quickly. nity arises.