Who Pays Closing Costs in Florida: Buyer or Seller?

When a property changes hands, both the buyer and the seller encounter financial obligations beyond the purchase price. These additional expenses, known as closing costs, are fees and charges associated with finalizing a real estate transaction. Understanding these costs is important, as they can represent a notable portion of the overall financial commitment. Both parties typically bear some responsibility for these fees, impacting the total funds required to complete the sale.

Understanding Closing Costs

Closing costs are fees incurred at the end of a real estate transaction, distinct from the down payment or sale price. These expenses cover the services and legal requirements necessary to transfer property ownership. They can be broadly categorized to include fees related to lending, property title and escrow services, government taxes and recording fees, and real estate professional commissions.

Additional categories include prepaid expenses and third-party service charges, such as appraisals or inspections. The specific items and their amounts can vary depending on the transaction’s complexity and the services involved. All closing costs contribute to the legal and administrative completion of the property transfer.

Buyer’s Typical Closing Costs in Florida

Buyers in Florida typically encounter closing costs primarily associated with securing a mortgage and ensuring the property’s condition and legal standing. Loan origination fees, charged by lenders for processing the mortgage application, usually range from 0.5% to 1.5% of the loan amount. Appraisal fees, typically $300 to $500, are paid to a professional who assesses the property’s market value, a lender requirement.

Buyers also pay for credit report fees, which allow lenders to evaluate creditworthiness, and survey fees, generally $400 to $700, to verify property boundaries. Home inspection fees enable buyers to identify potential issues with the property before purchase. Lender’s title insurance is a customary buyer expense, protecting the lender’s investment against future title disputes or defects.

Recording fees for the deed and mortgage are typically paid by the buyer, ensuring these documents are officially registered with the county. Prepaid expenses, such as initial deposits for property taxes and homeowner’s insurance into an escrow account, are often required at closing to establish future payments. Mortgage insurance premiums (FHA, VA, or conventional mortgage insurance) are typically paid by the buyer if their down payment is below a certain threshold. Settlement fees, $300 to $600, cover the administrative services of the closing agent or attorney who manages the closing process.

Seller’s Typical Closing Costs in Florida

Sellers in Florida primarily incur closing costs related to commissions, transfer taxes, and outstanding property obligations. Real estate agent commissions represent the largest expense for sellers, typically 5% to 6% of the home’s sale price, often split between the buyer’s and seller’s agents. This significant fee covers the services provided by both agents in facilitating the sale.

Documentary stamp taxes on the deed, often called “deed stamps,” are generally a seller’s cost in Florida, levied at $0.70 per $100 of the total consideration paid for the property in most counties. For example, a $400,000 sale would incur $2,800 in this tax. Documentary stamp taxes are also applied to promissory notes at $0.35 per $100 of the obligation, with a maximum cap of $2,450, and on mortgages at $0.35 per $100 of the secured amount, with no cap.

The intangible tax on the mortgage is a seller expense in Florida, calculated at $2.00 per $1,000 (or 0.2%) of the secured loan amount. Sellers are typically responsible for prorated property taxes up to the closing date, ensuring all taxes are current at the time of transfer. Owner’s title insurance, which protects the buyer from title defects, is customarily paid by the seller in most Florida counties, though some counties (e.g., Miami-Dade, Broward, Sarasota, Collier) typically have the buyer pay. Outstanding liens, judgments, or mortgage payoff fees are also the seller’s responsibility.

How Closing Costs are Negotiated

While customary practices exist regarding who pays which closing costs, the final allocation is frequently determined through negotiation between the buyer and seller. The terms of the purchase agreement often dictate these arrangements, allowing for flexibility based on market conditions and individual circumstances. Buyers might request “seller concessions,” where the seller agrees to cover a portion of the buyer’s closing costs.

This can be particularly common in a buyer’s market or when a seller is motivated to close the deal quickly. Conversely, in a competitive seller’s market, buyers may be less inclined to ask for such concessions. Real estate agents play a significant role in facilitating these negotiations, advising their clients on what is customary and achievable. The agreement on closing cost allocation is a strategic element of the overall real estate transaction, impacting the net proceeds for the seller and the total cash needed by the buyer at closing.