Selling a house is not an easy task even in the best of markets. Some closing costs can be negotiated between the buyer and seller and some can not. In Arizona, some title companies “bundle” their fees within their fees into one lump sum, while others identify each charge individually.
Keep in mind that a buyer may ask the seller to contribute towards buyer closing costs. This may be a dollar amount or a percentage of the sales price. Sellers should understand their closing costs plus any additional seller concessions they agreed to when anticipating their net proceeds.
When selling a home in the Phoenix area, be sure to hire a great Real Estate Agent to help you get the most money for your home. Not all agents are created equally! Be sure you understand how to get your home ready to sell!
Average Closing Costs for Sellers
Seller closing costs typically are about 1% of the sales price. Seller fees typically consist of title and escrow fees, commissions, unpaid taxes, HOA disclosure and transfer fees and buyer’s title insurance policy.
Example of Seller Closing Costs:
Here are some sample fees based on the sale of a $275,000 home in the Phoenix area. Costs will vary depending on the fees charged by a Home Owner’s Association (HOA). Seller’s loan payoff (if any) will vary by seller.
|Closing Cost Item||Average Cost||Explaination of Cost|
|Realtor Fees||Negociated||Cost of Realtor Services.|
|Owner's Title Insurance policy||$1438||Guarantees the buyer clear title to the property|
|One-Half of the escrow Fees||$445||Services of Title Agency to ensure clear title passes to the buyer|
|Seller Loan Payoff||Varies by seller||Title Agency obtains loan pay off and ensures the seller's loan is paid|
|Any other Lender charges||Varies by seller||Accrued interest, prepayment penality (if any)|
|Home Warranty||$300 - $700||Home Warranty if seller agreed to pay this when the purchase contract was negociated|
|Home Owner Transfer Fee||Varies by HOA, typically $400||Usually split between buy and seller. Cost charged by HOA to update their record keeping and change the name of the property owner in their records.
|Seller Disclosure Fees||$400||Fees HOA charges a seller to provide the buyer the Covanents, Conditions and Restrictions (CCRs) if property is in a HOA community|
|Outstanding HOA Dues||Any outstanding HOA dues or fines owned by the seller at time of closing|
|Courier Fees||$50 - $250||Courrier fees for sending payoff to seller's lender and any other courier fees needed for the transaction|
|Recon Tracking Fee||90||Ensures seller obtains the official documentation from the lender showing the debt is paid in full|
Real Estate Agent Fees for Sellers
This is the fee a Real Estate Agent will charge to sell your home. These fees are negotiable. Keep in mind the agent with the lowest commission fee may not get you the most money for selling your home. To sell a home for the most amount of money, your house first needs to be in great selling condition. You want an experienced agent who will provide recommendations to get your house ready to sell. You want someone who will be honest with you about the condition of your house.
As a seller, you want an agent experienced in negotiation. Not only does the agent need to negotiate with you regarding commissions, they need to negotiate with the buyer’s agent. There are three key negotiating components to negotiate on a house sale. First, the agent needs to be able to negotiate with the buyer’s agent regarding price, closing date or any other key items in the initial purchase contract. Once the buyer completes a home inspection, there may a request for the seller to make repairs. This is, in fact, more negotiation. The next negotiation may be the appraisal if the appraisal does not meet the contract price.
Some discount brokerages may quote a lower fee than other brokerages. Be sure to inquire about ALL fees to be sure you are making a valid comparison. There is a new trend for real estate companies to buy a house directly from the owner for a quick close. This may work for some homeowners, however, you likely are receiving less for your home than you would if you listed with an experienced Real Estate Agent. You typically get the most money for your house when it is exposed to multiple buyers.
Owner’s Title Policy
This is a title policy that a seller buyers for their home buyer. This policy guarantees the buyer clear title to the house. If, for example, a year after the sale, someone contacts the buyer and claims rights to the house. If he/she can prove legal ownership of the property, that second owner may be due proceeds from the sale.
Why is this important? There could be many reasons why someone would put a lien on a property. The buyer of the property needs to know there are no liens on the property that could affect their ownership. The title company completes research to identify any lien a property so that the lienholder is paid from the proceeds of the house. Or, if the lien exceeds the proceeds of the property, and the seller is unable to bring additional funds to close on the property, the buyer can cancel the transaction and receive a full refund of the earnest money. There are various types of property liens, such as a mortgage lien, and IRS lien, a mechanics lien (for work performed on the property but not paid for).
The cost of the title insurance policy varies but is calculated based on the value of the property. A title company can quote a specific amount once given the sales price.
Who pays for Escrow Fees Buyer or Seller?
In Arizona, we use a Title or Escrow company as a neutral third party to handle the sale of a property. Typically, the Seller will pay for a Title policy for the Buyer. And, if the Buyer is getting a Loan, the buyer will buy a Title policy for their Lender.
The title company will conduct the title search, get fees due from a Home Owner’s Association (HOA), ensure the HOA is paid monies due from the seller at closing. They also request the Covenants, Conditions & Restrictions (CCRs) from the HOA and ensure the information is sent to the buyers. The title company will also hold the earnest money, receive funds from the buyer and distribute funds to the seller. Seller’s pay their own escrow fees and buyers pay their escrow fees.
Seller Loan Payoff
The title company will provide a form to the seller to sign which authorizes the title company to contact the lender on behalf of the seller. The lender will provide the complete pay off up to the date of the scheduled closing of the transaction. At the closing, the title company will wire full pay off to the lender, on behalf of the buyer.
What are other Lender Fees?
Lender’s charge a variety of fees to buyers to provide a loan on a property. These fees can include Administrative fees, Documentation Preparation fees, Processing fee, and Appraisal fee and Credit Reporting fees. Check with your Lender to get the complete list of their Lender fees.
Home Warranty for Sellers
If the seller has agreed to purchase a home warranty for the buyer, the title company will send payment to the home warranty company at closing. Typically in Arizona, the home warranty is an item on the purchase contract and negotiated between the buyer and seller. The amount the seller will pay for the home warranty can also be negotiated. The home warranty will cover many household items, such as the AC / Heating system, water heater, some plumbing items, appliances and more. This is typically a one year warranty with a co-pay due when the service representative visits the house.
Home Owner Transfer Fee
Many HOAs will charge a fee for transferring the name on a property from the seller to the buyer. This can be paid by the buyer, seller or split between the two. This too is part of the purchase contract HOA Addendum and is negotiated at the time a purchase offer is made.
Seller Disclosure Fees
An HOA will charge the home seller a fee to provide the buyer the Covenants, Conditions, and Restrictions (CCRs). The CCRs are the rules for the community. By purchasing a home within a Home Owner Association (HOA), the home buyer is agreeing to abide by the community rules. These CCR’s are provided to the buyer after escrow has been opened. Once the escrow is opened, the title company sends the notification to the HOA that the property is now under contract and there will be a new homeowner. In Arizona, a buyer has five days after receipt of the CCRs to cancel the contract if there are restrictions the buyer cannot live with. These are typically provided to the buyer in a paper, electronically or even in a CD format. Arizona state law requires the seller to provide the CCRs of the community and the seller must pay for the CCR’s.
Outstanding HOA Dues
If a seller is behind on HOA dues, these will be collected at the tie of the sale of the property. Also, many HOAs have someone drive by a property once it is under contract to look for any violations of the CCRs. This type of violation could include too many weeds in a yard, a fence or gate in disrepair, etc. Additionally, the HOA is looking for anything they that puts the seller in violation of the CCRs. These items need to be resolved prior to the sale. If the property owner has an outstanding fine from previous violations, this would need to be paid as well.
Fees charged to send the loan payoff back to a lender, loan documents from the lender to the title company, etc.
Recon Tracking Fee
A Recon tracking fee is charged to ensure the lender records the payoff loan and releases the lien on the property.
When are Closing Costs paid?
Closing costs are paid when the Buyer signs all final closing documents. Typically, a few days prior to the actual closing date.
Get Help from your Phoenix Real estate Agent
Are You wondering what are closing costs are when selling a home in Phoenix? This list will help you understand what to expect as you consider selling your house. Every sale is different so fees will vary by sale and seller. Not all sellers have loans, not all homes are in HOA communities. Your Real Estate Agent can provide an estimate of your sales proceeds for your home. The key question for most sellers is how much money will I receive from the sale of my property.
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To get answers about real estate, contact Shirley Coomer at Keller Williams Realty. For most of us, our home is our most important asset. We need to sell for top dollar. You need someone experienced in sales and marketing.