Whenever you complete a real estate transaction, you will generate what is known as closing costs, or the price of actually transferring the title of a piece of property from one party to another, as well as related expenses. Closing costs can pop up on your receipt whether you are buying or selling the property in question, depending on the agreement you made. If you do not want to foot the bill yourself, make certain this is clearly worded in any purchase contracts.
Closing costs are determined by what was necessary to end the real estate transaction, which could include:
- Running credit reports
- Processing loan paperwork
- Inspecting and appraising the property
- Paying discount points (upfront fees for lower interest rate)
- Surveying the property and verifying its boundaries
- Adding title insurance
- Researching the title’s history
- Making deposits into an escrow
- Requesting the county record new land records
- Evaluating mortgage loan applications
The more effort that goes into your real estate transaction, the higher the closing cost, as you might expect. On average, someone buying a home can expect closing costs to be about 2% to 5% of the purchase price of the property. For example, if a home costs $500,000, the closing cost altogether could be $10,000 to $25,000.
If you are using a lender for your real estate transaction, they must provide you a loan estimate. On this estimation form, a rough idea of the closing cost will be included. Keep in mind that this is, as the name suggests, only guesswork and the cost could be greater or lesser. You will also be given a closing disclosure statement once you find a buyer, or a seller, that will have a detailed line item list of all closing cost fees. Compare this to your previous loan estimate and don’t hesitate to ask questions and negotiate on costs you disagree with.
For more information regarding closing costs and how they are controlled by real estate law, you can call 239.970.6844 to connect with Your Advocates, Powell, Jackman, Stevens & Ricciardi, P.A. Our Fort Myers real estate attorneys can help you understand your rights or offer legal counsel when it comes to the intricacies of your transaction. Contact us today to get started.