Today let’s talk about closing costs. What should the seller expect to pay when selling their property?
There are three major costs that apply to sellers:
1. Broker fees. Usually the seller pays anywhere from 0% to 10% commission, depending on the case. Yes, it is possible to pay 0% commission.
Here in our market, the average commission fee comes to about 6%, which is split between the selling agent and the buyer’s agent. The seller does not pay the buyer representative directly; the seller pays the whole commission to the listing agent and that agent pays the buyer agent at closing.
2. Title fees. Usually title fees include title policy, escrow fees, and some fees related to notaries and records of the deal. It’s customary in the Phoenix market that the seller will buy title policy insurance for the property. The title policy fee is usually a percentage of the price of the home; the higher the price, the higher the cost of the title policy.
Escrow fees are the fees that the title company charges for the labor for handling the paperwork, accounting, signings, and so one. Sometimes, if you want to have a notary come to your home, there will be additional fees. A lot of times title companies have a relationship with brokers such that they can give some discounts to the sellers. For example, an investor who does multiple deals with a title company, you can sometimes get a 50% discount on the escrow fees.
3. HOA fees. These could be HOA disclosure fees, transfer fees, or capital improvement fees. The disclosure fee is the fee that the seller pays the property management company to prepare the documents. The transfer fee is what the HOA charges to create a new profile for the new buyer and transfer from the old account to the new one. As far as who pays it, this fee is negotiable. The final, rare HOA fees are capital improvement fees which can be a flat fee or a percentage of the sale.
If you have any questions or you would like a niche sheet specific to your property, please don’t hesitate to reach out to us. We’d love to help you.