Seller Closing Costs in Florida: How Much Will You Pay?
People sell their homes for various reasons, from moving for a job to downsizing during retirement to getting a divorce. No matter the reason, most people look forward to the profits they will reap when they sell their house.
Selling your house can result in a significant profit - but you should also consider closing costs. From title searches to documentary stamp taxes to commissions, these costs can add up to as much as 5 to 10% of the total sale price of your home. A Tampa area realtor can help you get maximum value for your home sale.
Based in Lithia, Eaton Realty works with buyers and sellers throughout Hillsborough County. With decades of experience in the real estate world - including 20 years in the region - we have the knowledge and skill necessary to get you the best possible price for your home. Reach out to schedule a consultation with a member of our team.
What Are Seller Closing Costs?
When you accept an offer on your home, it may be tempting to do some quick math and get excited about how much profit you will be making. While many walk away from a home sale with a tidy profit, closing costs eat into the total. You will find the exact amount in a closing disclosure three days before closing.
You will typically be required to pay several different expenses in closing costs. The first - and usually largest - cost will be the real estate agent commissions.Typically, the seller pays a commission to both the listing agent and the buyer’s agent. The percentage may vary but is often around 6%.
The two agents usually earn an equal commission, receiving 3% each. The amount of commission will vary based on the home's selling price. If your house sold for $350,000 with a 6% total commission, for example, then the commission would be $21,000, split between the agents.
It is possible to avoid paying a high commission by listing your home “for sale by owner” (FSBO). Remember that selling your house on your own requires significant work and may result in a lower sales price. You may still have to pay the buyer’s agent a commission.
Negotiating a lower commission is also possible but may result in fewer services. However, if the real estate market is hot, your realtor may be willing to accept a lower commission to snag a coveted property.
The next closing cost you may be required to pay is title insurance. Before a home is sold, a title search is performed to ensure that the seller actually owns the home and that there are no encumbrances (such as a lien or a mortgage that was not cleared) on the title. A title insurance policy can protect you against an unexpected - and potentially expensive - legal battle if a dispute arises over some aspect of the title.
Next, the seller is often required to pay various taxes and fees. These may include property taxes and homeowner association (HOA) fees, which are often split with the buyer on a prorated basis. For example, if you sell your home in June, you may pay half of the year's property taxes and HOA fees. You may also be required to pay for other items, such as a deed transfer tax.
In addition, you may agree to pay some of the buyer’s closing costs. This is often referred to as a seller concession or credit. Sellers typically agree to cover these costs to make the deal go through or to get their house sold in a buyer’s market. Other examples of seller concessions may include the cost of necessary repairs that the buyer found during the home inspection.
Finally, keep in mind that unless you own your home outright, you will need to pay off your mortgage and any home equity line of credit, liens, or judgments against your property with your profits. While these are not technically seller closing costs, you should always factor them in when considering your home sale's final profit.
How Much Should I Expect to Pay in Seller Closing Costs in Florida?
Each state has its way of handling real estate transactions, so closing costs for a seller in Florida might be slightly different from the same costs in another state. Florida has no state income tax, so real estate is one area where the state collects more tax than other states – the money has to come from somewhere! In Florida, you should expect to pay a commission plus title service fees, owner’s title insurance, a documentary stamp tax, and recording fees. You may also have other costs, including seller concessions or buyer incentives.
First, a title search fee is usually covered by the seller in Florida. This search will involve a detailed examination of the historical records concerning a property, including deeds, court records, and property and name indexes. The search aims to verify the seller’s right to transfer ownership. The cost for a title search fee depends on the complexity of the examination and may range from as little as $150 to over $1500.
Second, you will likely pay for title insurance. While title insurance is not required under Florida law, buying a policy is generally considered a good idea. It may cost as little as $500 to protect you against future litigation over the title to the property. The buyer will also typically buy title insurance.
Third, the Florida documentary stamp tax is effectively a real estate transfer tax. For everywhere except Miami-Dade County, the rate is 70 cents for every $100 paid for the property - or 0.7% of the total cost of the house. In Miami-Dade County, the tax rate is 0.6% for single-family homes and 1.05% for all other types of properties. For example, if you sell a house in Hillsborough County for $400,000, the documentary stamp tax will be $2,800.
Fourth, the city or county where the property is located will charge a fee to legally record its deed and mortgage information. This cost varies by location but usually isn’t a significant amount. In Hillsborough County, the recording fee is $10.00 for the first page plus $8.50 for each additional page.
These costs may add up to 1 to 2% of the total sale price of your home. If you sold your house for $300,000, these basic fees may be $3,000 to $6,000. You will likely have various other costs to pay off at closing, such as:
When added to the above expenses, these costs may total 5 to 10% of the purchase price of your home - before you pay off your mortgage or any other loans. For a house that sold for $400,000, you may expect to pay $20,000 to $40,000 in closing costs (including commission).
These numbers seem overwhelming, especially when you are looking forward to a decent profit. Seller closing costs are one reason why it may be a better idea to rent rather than buy a home if you don’t plan on living there for at least five years. You can build equity when you own a home for a longer time. If you sell a house within a year or two of buying it, you may end up losing money on the deal.
Of course, one way to make those closing costs hurt less is by working with a seasoned real estate agency that can help you get top dollar for your listing. There are a lot of factors that go into a successful home sale, from staging to great pictures to open houses. The team at Eaton Realty can work with you to get your house in peak condition before marketing it to increase the likelihood of getting an offer for the asking price - or above.
Let Eaton Realty Help You Sell Your Home
Putting your house on the market can bring up a variety of emotions, from sadness to excitement to anxiety. No matter how you feel about selling your home in Tampa Bay, Eaton Realty will work with you to get the best possible price. We’ll also explain what you need to know about the process, including anticipated seller closing costs.
Our team works with buyers, renters, sellers, and investors to help them with their real estate needs. As a well-established realty company, we know the ins and outs of the Hillsborough County real estate market. If you’d like to learn more, fill out our online contact form or give us a call at 813-592-8582 to talk to a team member.