Who Pays Closing Costs in Florida?
When buying or selling Florida real estate, the buyer and seller share closing costs. The costs vary county by county, with buyers responsible for most of the taxes and fees. The biggest chunk of seller closing costs is the real estate agent's commission.
Over 21 million people claim the Sunshine State as home. The state of Florida has a lot to offer for lifestyle and climate. There is an endless array of sunny, sandy beaches to enjoy year-round. The real estate market also makes Florida an attractive place for homebuyers.
Let us dive deeper into closing costs in Florida.
Seller Closing Costs in Florida
The Florida real estate market is jumping, with condo sales rising 14% in central Florida at the start of 2021. Whether it is a house or a condo, sellers closing costs usually include:
- Broker Fees
- Outstanding Liens
- Title Fees
- Miscellaneous Expenses
Florida Seller's Broker Fees
The most substantial closing cost for sellers in Florida is typically the real estate commission. The seller is responsible for paying this fee, which usually gets subtracted from the purchase price. The seller and real estate broker agree on the commission percentage or fixed fee with the initial listing agreement.
Sellers must pay all remaining debts before finalizing the sale. They must pay off their mortgage and settle any unpaid admin fees. Any other lending contracts attached to the home as a lien also need to be paid during the closing period.
Sellers traditionally cover the recording fees for documenting deeds and mortgages. Documentary stamp taxes are excise taxes for recorded documents in Florida. Deeds, mortgages, and written monetary agreements are common examples.
The Clerk of Court requires a tax payment for official document records. Taxes can be paid to the Florida Department of Revenue when a taxable document is not yet recorded.
Withholding tax is another aspect of the closing cost, specifically for non-U.S. citizens. Up to 15% of the sale price gets withheld until the IRS confirms taxes are up to date.
The fees for transferring the title to a new buyer cost $150-$400 on average. This price includes title insurance, another aspect of seller fees. Sellers can buy title insurance to ensure protection if a title issue comes up later.
Anyone selling a home needs to prepare for extra closing costs to pop up. Repair costs commonly fall under the miscellaneous category and can be just a couple hundred dollars or thousands. It depends on the amount of work and the buyer's agreed requests in the offer or contract.
Fax and wire fees can also add up, especially if the transaction is conducted mainly via mail.
Closing Costs for Buyer in Florida
The average time for a conventional home purchase is between 45 and 50 days. The closing period is when buyers need to prepare their payments for the closing day when the sale gets finalized. The buyer pays:
- Mortgage Costs
- Title Search
- Home Inspections
- Notary Fees
The purchase price and down payment determine the overall mortgage fees due at closing. Most buyers need to pay a deposit between 5% and 20%, plus mortgage protection insurance and administrative expenses.
The title search costs $100-$200. It searches for all titles filed on the property and provides a clear history to confirm ownership. The title search needs to come up empty with no unknown history or owner issues. If the title search indicates the seller is the official owner, then the sale can proceed. Sellers typically protect themselves from any problems with title insurance.
Mortgage escrow is essentially the next step after the seller accepts the buyer's offer. Buyers and sellers agree to this legal agreement where a third party holds the deposit. Once the escrow period and sale are complete, the third party releases funds to the seller.
Most homebuyers choose to inspect the property before the sale is final. Lenders recommend home inspections to ensure the property is fit for home insurance, which they require before closing. And home insurance companies require a home inspection before approving a loan.
A certified home inspector walks through the property and carefully checks for signs of damage and building code compliance. They note any minor or major repairs required so that buyers can understand all outstanding repair expenses.
If significant problems arise from the home inspection, the buyer may want to ask for money to cover repairs. In some cases, the buyer pulls out altogether.
Buyers are typically on the hook for notary fees. A notary is a licensed document preparer and a witness who can legally confirm the signing of required documents.
A notary needs to be present to finalize many legal documents, including those for real estate transactions.
How Much Are Closing Costs in FL?
The average 2021 closing costs in Florida are $8,213.44 with taxes or $4,147.03 without taxes.
Each party can negotiate the final closing fee during the sale. If the buyer comes in under the asking price, they may pay more to close the deal. The same goes for the seller, who may pay more of the closing costs hoping the buyer will pay more.
Closing costs also depend on the property's location and value. A luxury beachfront mansion will have higher closing costs than a small condo an hour from the coast. The more mortgage financing that is involved, the higher the mortgage fees will be as well. Plus, the taxes and fees may vary in different counties.
A quick rule of thumb for estimating closing costs is the seller pays 5%-10% of the sale price on average. The buyer typically pays 3% to 4%, but it can be slightly different for every transaction.
Get a Florida Home Insurance Quote
There was a steady stream of Florida homebuyers coming and going during the pandemic. Yet, Florida's population growth reached its lowest rate since 2014 despite the busy market.
The market is now hot again. Many sellers are looking to move on, and buyers hope to get a slice of the American dream. If you are buying a home in Florida, then home insurance is an absolute must.
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Hope that helps!
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