What are the closing costs paid by the seller?
An Explanation for Northern Virginia sellers
Usually when one discusses closing costs in connection with the purchase and sale of a home they are referring to the costs incurred by a purchaser. These costs include items such as lender's fees, money to establish escrow accounts for taxes and insurance, title charges, title insurance, and government recording fees. Settlement costs can also include a survey of the property, pest inspection, appraisal, and other fees.
For a detailed explanation of the settlement costs incurred by purchasers in Virginia, please read my post:
Purchaser's Closing Costs in Virginia.
Sellers of a home also incur some settlement costs, most prominently the fee paid to the real estate broker for selling the home. In today's current Northern Virginia buyer's market, it is often typical for many purchasers to ask the seller of a home to pay a portion or all of their closing costs. Of course, this request leads to negotiation.
Here's a breakdown of seller's settlement closing costs in Virginia:
Total Sales/Broker's Commission
The first category of closing costs comprises the broker's fees for marketing and selling the home. There is no standard or set fee for selling a home. Do not let any REALTOR tell you differently.
Commission: This fee will be determined when you first hire a listing agent to sell your home and sign a listing agreement with the brokerage. The commission is normally represented as a percentage of the sales price, but it could be a flat fee. Your listing agent, by placing your home on the Multiple Listing Service, then enters into a contract with all buyer's agents who show your home, agreeing to split his or her commission with the cooperating agent. At settlement you will see these fees delineated at the top of page 2 of the important HUD-1 Settlement Statement.
Transaction Fee: Some agents and brokerages will charge you a transaction fee, or administrative fee, above and beyond the commission. I DO NOT. PERIOD.
Title & Recording Charges
Virginia home sellers have several fees that they will be charged by the settlement company or closing attorney as well as a Grantor's Tax.
Settlement Fee: This fee can vary with different settlement companies but is typically between $250 and $350. This is the fee paid to the settlement company for their services in performing the closing on the property.
Document Preparation: This covers the service of preparing the deed to transfer the property from the seller to the purchaser. This can cost between about $150-$350.
Release Process/Delivery Fee: This fee is paid to the settlement company to allow the liens on your property (usually just your mortgage) to be released. The fee is typically between $150-$200.
Grantor's Tax: This fee is paid by all sellers in Virginia when they transfer a home. The fee is equivalent to 0.1% of the sales price.
Additional Settlement Charges
Pest Inspection: Usually costs $30-$60. Often the purchaser will pay for this, but sometimes it is left up to the seller.
Archiving/Scanning: Some settlement companies will archive and/or scan all the closing documents to keep on file for future reference and charge a nominal fee for this service.
Let's take a look at an example of two different sales and what the seller's costs would be:
|R-5 Form Processing Fee||$10||$10|
|Release Process/Delivery Fee||$175||$175|
|TOTAL CLOSING COSTS||$28,110||$52,510|
|CLOSING COSTS % of SALES PRICE||6.25%||6.18%|
Ready to sell your home?
Contact Brian Block, REALTOR/Attorney: Licensed in Virginia & WashingtonD.C. (703) 626-0715 (703) 626-0715 . If you are interested in selling a property in Northern Virginia including Arlington County, Alexandria City, Annandale, Burke, D.C., Fairfax County, Falls Church City, Lorton, Springfield, Washington D.C., contact Brian today.