Continue reading to learn about five closing charges that Sacramento home sellers should be aware of. Closing costs, as you may be aware, are all of the fees and charges that must be paid at the closing table on closing day. Closing expenses typically range from 3% to 6% of the entire purchase price of a home, with some paid by the buyer, some by the seller, and the majority split between them. And this is where the majority of folks become perplexed.
1. Agent Commissions
Typically, Sacramento home sellers pay both their and the buyer’s real estate agent commissions at the closing table. “Real estate commissions vary, but on average, they are between 5% and 6% of the total loan value. The commission is distributed evenly between the buyer’s and seller’s agents.”
Agent commissions range from 5% to 6%, which means that for a $300,000 home, you’ll pay $15,000 to $18,000 in commissions. That may appear to be a lot, but keep in mind how much you’re getting for your money. Your agent will handle all of the selling effort for you, including updating your listing, scheduling and handling paperwork, and a variety of other small duties such as organizing pictures of your home. In essence, the time savings are huge.
However, the commission can sometimes be negotiated. Contact a Sacramento agent at (916) 507-2502 to learn more about agent commissions.
2. Transfer Taxes
When the title to a property is transferred from one party to another, such as when the title to your home is transferred from you to the buyer, transfer taxes are imposed. It can be assessed on a local, county, or state level.
The amount of transfer taxes is usually determined by the sale’s location. Twelve states, for example, have no real estate transfer tax, whereas Arizona imposes a minimal flat cost of only $2.00. In all other states, transfer taxes range from 0.01 percent to 5% of the home’s sale price.
Again, if you’re unsure about transfer taxes in Sacramento, talk to your agent at (916) 507-2502.
3. Buyer’s Home Warranty
As you may be aware, homeowners insurance primarily insures the structural features of your home against damage caused by things like fire or natural catastrophes. A home warranty, on the other hand, serves a distinct purpose and is one of the closing fees that Sacramento home sellers should budget for.
The cost of repairing and/or replacing appliances and systems such as electrical, plumbing, and HVAC is generally covered by the home warranty. Some sellers choose to obtain a home warranty before closing so that the buyer knows she won’t be responsible for any repair bills after signing the dotted line. Many other buyers offer to pay for a one- or two-year warranty after the sale is completed. While a home warranty is not required, it is widespread and costs between $300 and $600.
4. Mortgage Payoff
If you still owe money on your home, you’ll have to pay off your mortgage at the closing. The earnings of the sale are usually used to pay down the outstanding mortgage.
Keep in mind, however, that if the selling profits fall short of the mortgage plus prorated interest, you may have to make a financial contribution. Furthermore, if you pay off your home loan ahead of time, you may be charged a prepayment penalty. For the original loan amount, these penalties typically range from 2% to 4%.
5. Prorated Property Taxes and Title Insurance
At the closing table, you should budget for two additional costs: prorated property taxes and title insurance.
PRORATED PROPERTY TAXES
“You must pay property taxes that have accrued up to the date of the sale when you sell your house in Sacramento. Dues differ by state and municipality, so check with your local county clerk’s office to learn what you owe before you close. After you’ve paid all of your property taxes, the buyer assumes responsibility for them.”
The home sellers is normally responsible for the title insurance. It “doesn’t include a monthly charge,” unlike other types of insurance, and instead requires a one-time payment. Title protection is in place for the duration of your homeownership once you make the single payment at closing. “Title insurance costs 0.5 percent to 1% of the total amount of your home loan in most states.”
The Agent Advantage
These are the most typical and significant costs that sellers must pay at closing, although there may be others. A lot of it is determined by the location and the terms of the sales deal. That’s why having an experienced Sacramento agent on your side is so important – so you don’t end up with any costly closing-table surprises. InsightfulREI. Contact us immediately at (916) 507-2502 to ensure that you are fully prepared for everything that may arise at the closing table.