How Much Are Closing Costs in Vermont?

Navigating a real estate transaction involves various financial considerations beyond the agreed-upon purchase price. Closing costs represent the collection of fees and expenses paid by both buyers and sellers to finalize a property transfer. These costs cover a range of professional services, administrative tasks, and governmental charges necessary to complete the sale. Understanding these expenses is important, as they are a distinct financial obligation separate from the down payment or loan principal.

Understanding Closing Cost Categories

Real estate transactions involve several categories of closing costs. Lender fees for buyers include loan origination fees, covering mortgage processing costs. Appraisal fees determine property value, and credit report fees cover credit history retrieval. Additional lender costs might include flood certification fees.

Title and escrow fees are another category. A title search verifies legal ownership and identifies liens. This precedes title insurance issuance, protecting both lender and buyer against future claims. Escrow fees cover a neutral third party holding funds and documents until conditions are met; closing fees administer the process.

Legal fees are for attorneys who review documents, prepare deeds, and oversee the closing to ensure legal compliance. Prepaid items are expenses paid in advance, such as pro-rated property taxes and initial homeowner’s insurance. Recording fees are paid to local government to register ownership transfer and mortgage deeds.

Vermont Specific Closing Cost Items

Vermont real estate transactions involve specific costs, especially the Vermont Property Transfer Tax (PTT). This tax is levied on real estate title transfers with distinct rates based on property use. For a primary residence, the rate is 0.5% on the first $200,000 of the property’s value, with the remaining value taxed at 1.47%. Non-primary residences, like second homes or investment properties, face a 3.62% rate if year-round habitable and not long-term rentals. However, unimproved land, seasonal camps, commercial properties, and long-term residential rental properties are taxed at 1.47%. All transactions include a 0.22% Clean Water Surcharge. Certain exemptions or reduced rates may apply for primary residences purchased with specific financing through state or federal programs.

Legal fees play a prominent role in Vermont, an “attorney state” for real estate closings. Attorneys prepare and review documents, conduct title searches, and coordinate closings. Buyers typically incur attorney fees ranging from $800 to $1,500, while sellers’ attorney fees usually fall between $600 and $1,200 for tasks like deed preparation. The cost of title insurance in Vermont generally ranges from 0.5% to 1.0% of the property’s purchase price. A lender’s title insurance policy is typically required for financed purchases; an owner’s policy is highly recommended.

Recording fees are paid to the town or city clerk to record transaction documents. The standard fee is $15 per page for most documents, such as deeds and mortgages. A separate $15 fee applies for recording the Property Transfer Tax Return form. Survey plats, if recorded, cost $25 per sheet. For rural properties, well and septic system inspections are often a consideration. Vermont regulations may require septic inspections before selling, and repairs can range from $8,000 to $25,000.

Buyer and Seller Responsibilities in Vermont

In Vermont real estate transactions, specific closing costs are typically allocated between buyer and seller, though many are negotiable. Buyers are generally responsible for mortgage-related fees. These commonly include:

Loan origination fees
Appraisal fees
Credit report fees
Recording of the mortgage deed
Pro-rated property taxes
First year’s homeowner’s insurance premium
Owner’s title insurance policy

Sellers typically bear real estate commissions, a significant portion of their overall expenses. The Vermont Property Transfer Tax is primarily the seller’s responsibility, though negotiable within the purchase agreement. Sellers also commonly pay:

Attorney fees for drafting the deed and clearing outstanding liens
Fees for recording the deed and any outstanding liens

While these are common allocations, the ultimate distribution of many closing costs is negotiable. Negotiations often occur during the offer stage and are formalized within the purchase and sale agreement. Outlining who pays for each fee in the contract helps prevent misunderstandings and ensures a smoother closing.

Estimating Your Vermont Closing Costs

Accurately estimating closing costs is important for buyers and sellers to prepare financially. For buyers, the Loan Estimate (LE) is a primary tool, provided by lenders within three business days of a mortgage application. This document details estimated closing costs, including lender fees, title services, and prepaid items. Three business days before closing, buyers receive the Closing Disclosure (CD), containing final figures for all closing costs.

Working with experienced professionals is instrumental in obtaining precise estimates. A Vermont real estate agent can provide insights into local market practices and cost allocations. Lenders offer detailed breakdowns of loan-related fees through the Loan Estimate and Closing Disclosure. Consulting with a Vermont real estate attorney early is also beneficial; they can explain state regulations, such as Property Transfer Tax implications, and provide tailored cost projections.

While costs vary, buyers in Vermont can expect closing costs to range from 2% to 5% of the home’s purchase price. For sellers, closing costs, largely driven by real estate commissions, typically fall between 6% and 8% of the sale price. Factors influencing these amounts include the property’s purchase price, loan type, negotiated terms, and location within Vermont, which can affect local fees and taxes.