Who Pays Closing Costs in Florida: Buyer vs. Seller

In Florida real estate transactions, both buyers and sellers face financial obligations beyond the property’s purchase price. These additional expenses, known as closing costs, are fundamental to finalizing any home sale. Understanding these costs is important, as they significantly influence the overall financial outcome. Preparing for these fees helps ensure a smoother process from contract to closing.

Understanding Closing Costs

Closing costs are fees and expenses incurred at the conclusion of a real estate transaction. Distinct from the property’s sale price, they are paid to various entities for services rendered during the home buying or selling process. These services include administrative tasks, legal reviews, and lender-related charges. While typically shared between the buyer and seller, their specific allocation varies based on practice and negotiation. In Florida, total closing costs, excluding real estate commissions, average around 2.3% of the home’s sale price for both parties combined.

Buyer’s Typical Closing Costs in Florida

Buyers in Florida typically face a range of closing costs, especially when financing a home purchase. These expenses relate to the loan, property condition, and legal standing. On average, buyer closing costs range from 2% to 5% of the purchase price, with financed purchases often at the higher end.

Common Buyer Closing Costs:

• Loan origination fees: Cover lender administrative costs for processing the loan, typically 0.5% to 1% of the loan amount.
• Appraisal fee: Required by lenders to assess property market value, generally $350 to $650 for a single-family home.
• Credit report fee: Usually $25 to $50, charged by lenders to evaluate creditworthiness.
• Lender’s title insurance: Protects the lender’s investment against future title claims. Paid by the buyer in Florida, costing around $3.50 per $1,000 of the purchase price for properties up to $100,000, with decreasing rates for higher values.
• Survey fees: For a professional land survey, verifying property boundaries and identifying encroachments. These fees vary.
• Recording fees: Charged by the county to register the deed and mortgage in public records, typically $10 for the first page and $8.50 for each subsequent page.
• Prepaid property taxes and homeowner’s insurance premiums: Collected at closing to establish an escrow account, ensuring future tax and insurance payments are made on time.
• Underwriting fees: Cover the lender’s cost of verifying loan application details and assessing risk.
• Attorney fees: Optional in Florida, if legal counsel is hired to review documents or represent interests. Fees range from $750 to $1,250 for straightforward services, or approximately $231 per hour for complex situations.
• Inspection fees: Typically $250 to $600 for a standard home inspection, paid upfront to assess property condition and identify issues.
• Document preparation fees: May be charged by the lender for drafting necessary loan paperwork.

Seller’s Typical Closing Costs in Florida

Sellers in Florida also bear a portion of closing costs, often related to transferring ownership and settling existing obligations. These costs typically average between 3.25% and 9% of the home’s sale price, with real estate commissions being the largest component.

Common Seller Closing Costs:

• Real estate commission: Usually the most substantial expense, covering services of both listing and buyer’s agents. In Florida, total commission ranges from 5% to 6% of the sale price. For example, a 6% commission on a $400,000 home amounts to $24,000, typically split between brokerages.
• Owner’s title insurance: A standard seller’s expense in Florida, protecting the buyer against title defects.
• Documentary stamp taxes on the deed: A state tax on real property transfer. The rate is $0.70 per $100 of the total consideration. For example, on a $400,000 sale, this tax is $2,800.
• Prorated property taxes: The seller pays their share of property taxes up to the closing date, ensuring a fair division of the annual tax bill.
• Homeowners Association (HOA) estoppel certificate fees: Incurred if the property is part of an HOA. This certificate outlines outstanding fees or dues, ensuring the buyer does not inherit the seller’s financial obligations. Florida law caps this fee at $299 for a standard certificate, with additional fees for expedited requests or delinquent accounts.
• Recording fees for mortgage satisfaction: Paid by the seller to officially record that their previous mortgage has been paid off.
• Attorney fees: Optional for sellers, if legal representation is sought for contract review or other closing matters. Flat fees typically range from $750 to $1,250.
• Title search fees: Often covered by the title company chosen by the seller to ensure a clear title.

Negotiating Closing Costs

While there are typical allocations for closing costs between buyers and sellers in Florida, many expenses are open to negotiation. Florida law does not mandate specific parties to pay certain closing costs on residential purchase agreements, allowing flexibility. Negotiation ability is often influenced by current market conditions, such as whether it is a buyer’s or seller’s market.

In a seller’s market, high demand means sellers may be less inclined to cover buyer’s costs. Conversely, in a buyer’s market, sellers might offer concessions to attract offers. The urgency of the sale also plays a role; a seller needing to close quickly might be more willing to contribute to a buyer’s costs. Specific transaction circumstances, like issues discovered during a home inspection, can also lead to negotiations where the seller might offer credits towards closing costs.

Costs can be shifted through various means, such as the seller agreeing to pay a portion of the buyer’s closing costs, known as seller concessions. Alternatively, a buyer might agree to cover a cost typically borne by the seller. Any agreements regarding the shifting of closing costs must be clearly documented within the purchase contract. This ensures both parties understand their financial responsibilities and helps prevent disputes at closing.