Q & A
Questions & Answers
For Home Buyers and Sellers
In a real estate transaction, the agent fees are typically paid by the party they represent. The agent representing the seller negotiates the total commission percentage, which is generally around 5% to 6% of the total sale price of the home. This commission is commonly split between the seller's agent and the buyer's agent.
However, the distribution of the commission may not always be an even split and can vary based on individual agents and specific circumstances. These details are typically negotiated between the parties involved.
The agents' commissions are typically included in the closing costs that the seller pays to finalize the transaction. It's important to note that discount brokerages may charge lower fees, but the quality and level of services they provide can vary, potentially impacting the overall profitability of the transaction.
Typically, the seller is responsible for paying several closing costs to finalize their real estate transaction. While the specific costs can vary depending on the location and the terms negotiated in the contract, here are some common closing costs incurred by sellers:
- Real Estate Agent Commission: The seller is usually responsible for paying the commission fees for both their listing agent and the buyer's agent. This fee is typically a percentage of the final sale price and is agreed upon in the listing agreement.
- Transfer Taxes: Some jurisdictions impose transfer taxes or stamp duties when the property changes ownership. The seller is typically responsible for these taxes, although in some cases, they may be split between the buyer and seller or negotiated differently.
- Title Insurance: It is common for sellers to purchase title insurance to protect the buyer against any potential title issues or claims. The seller typically pays for the buyer's title insurance policy.
- Attorney Fees: In certain areas, hiring an attorney to handle the closing process is customary. The seller is responsible for covering their own attorney fees.
- Outstanding Mortgage Payoff: If the seller still has an outstanding mortgage on the property, the remaining balance, including any prepayment penalties, is typically paid off from the proceeds of the sale.
- Prorated Property Taxes and HOA Fees: The seller is responsible for paying their share of property taxes and homeowner association (HOA) fees up to the closing date. These amounts are usually prorated based on the number of days the seller owned the property during the fiscal year.
- Miscellaneous Fees: Additional fees may include document preparation fees, courier fees, recording fees, and any outstanding utility or maintenance bills.
It's important to consult with a real estate professional or attorney who can provide specific information about the closing costs applicable to your location and transaction.
Buyers typically incur various closing costs when finalizing a real estate transaction. While these costs can vary based on factors such as location, loan terms, and negotiations, here are common closing costs that buyers may be responsible for:
- Loan-Related Fees: Buyers often pay fees associated with obtaining a mortgage loan, including application fees, loan origination fees, credit report fees, and appraisal fees.
- Home Inspection: Buyers typically hire a professional home inspector to assess the property's condition. The cost of the home inspection is usually paid by the buyer.
- Title Insurance: Buyers typically purchase title insurance to protect their interests in the property. This cost is usually borne by the buyer, and it includes both lender's title insurance and owner's title insurance.
- Escrow Fees: Escrow services ensure a smooth transaction and protect the interests of both parties. Buyers may be responsible for the escrow fees, which cover the cost of the escrow agent facilitating the transaction.
- Prepaid Expenses: Buyers may need to prepay certain expenses, such as property taxes, homeowners insurance premiums, and prepaid interest. These costs are typically pro-rated based on the closing date and the remaining period in the fiscal year.
- Recording and Filing Fees: Buyers may need to pay fees for recording the new deed and other legal documents with the appropriate government office.
- Homeowners Association (HOA) Fees: If the property is part of an HOA, the buyer may be responsible for paying HOA transfer fees or any outstanding dues required for membership.
- Applicable Taxes: Depending on local regulations, buyers may be responsible for paying certain taxes, such as transfer taxes or stamp duties, as required by the jurisdiction.
It's important for buyers to review their closing disclosure statement provided by the lender, which outlines the specific closing costs associated with their transaction. Consulting with a real estate professional or attorney can also provide valuable guidance on the expected closing costs based on the specific circumstances of the purchase.
The cost of selling a home at closing can vary depending on various factors, such as the property value, location, and negotiated terms. While the exact amounts can differ (generally, about 7%-8% of the purchase price), here are some typical costs associated with selling a home at closing:
- Real Estate Agent Commission: One of the most significant expenses is the real estate agent commission. The commission is typically a percentage of the final sale price and is split between the listing agent and the buyer's agent. The typical commission ranges from 5% to 6% of the home's sale price, but it can vary based on market conditions and negotiations.
- Seller Concessions: In some cases, sellers may agree to cover certain costs on behalf of the buyer, such as closing costs or repairs. These concessions are negotiated as part of the sales agreement.
- Prorated Property Taxes: Sellers are responsible for paying their share of property taxes up to the closing date. This amount is typically prorated based on the number of days the seller owned the property during the fiscal year.
- Outstanding Mortgage Payoff: If there is an outstanding mortgage on the property, the remaining balance, including any prepayment penalties or fees, needs to be paid off at closing.
- Home Warranty: Some sellers choose to provide a home warranty as an added incentive to potential buyers. The cost of the warranty is typically borne by the seller.
- Attorney or Escrow Fees: In certain regions, hiring an attorney or an escrow company to handle the closing process is customary. The seller may be responsible for paying their own legal or escrow fees.
- Title Insurance: Sellers often purchase title insurance for the buyer, which protects against any potential title issues. The cost of the buyer's title insurance policy is typically covered by the seller.
It's important to note that these costs can vary depending on the specific circumstances of the sale and local practices. It's advisable to consult with a real estate professional or attorney who can provide a more accurate estimate of the costs associated with selling a home in your particular area.
The cost of buying a home can vary greatly depending on several factors, including the location, property type, size, condition, and market conditions. Here are some common expenses to consider when estimating the cost of buying a home:
- Purchase Price: The purchase price is the most significant cost and varies based on the property's value, location, and negotiation between the buyer and seller.
- Down Payment: The down payment is the initial amount paid upfront by the buyer. It is usually a percentage of the purchase price and can range from 3% to 20% or more, depending on factors such as the type of mortgage loan and the buyer's financial situation.
- Mortgage Loan and Interest: If financing the purchase with a mortgage, there will be costs associated with obtaining the loan, including origination fees, application fees, and appraisal fees. The interest on the loan will also contribute to the overall cost over the life of the mortgage.
- Closing Costs: Closing costs are expenses associated with finalizing the purchase. They typically range from 1% to 2% of the purchase price and include fees for services such as title insurance, attorney fees, appraisal fees, inspection fees, and recording fees.
- Homeowners Insurance: Buyers are required to obtain homeowners insurance to protect their investment. The cost varies based on factors such as the location, size, and value of the property.
- Property Taxes: Property taxes are recurring costs that homeowners must pay based on the assessed value of the property and local tax rates. The amount varies depending on the jurisdiction and property value.
- Home Inspection: It is advisable to hire a professional home inspector to assess the property's condition before finalizing the purchase. The cost of a home inspection can range from a few hundred to a few thousand dollars.
- Moving Expenses: Buyers should budget for the costs associated with moving, including hiring professional movers, renting a moving truck, and purchasing packing supplies.
It's important to note that these costs are estimates and can vary significantly based on individual circumstances and location. Consulting with a real estate professional and a mortgage lender will provide more accurate information regarding the specific costs associated with buying a home in your desired area.
For any additional inquiries about buying or selling in the Florida real estate market,
please feel free to contact us at 407-352-8200.
The dedicated team at McNally Real Estate is here to assist you and provide the guidance you need.