Selling a house is not an easy task even in the best of markets. I am often asked What Are Closing Costs When Selling A Home in Phoenix? What are closing costs in Chandler? What are closing costs in Tempe? Also, what are closing costs in Gilbert? You may want to use a Mortgage Calculator to estimate your closing costs when selling a house in Arizona.
Some closing costs can be negotiated between the buyer and seller and some can not. In Arizona, some title companies “bundle” their fees into one lump sum, while others identify each charge individually. While closing costs are state and community-specific, if you are buying in the surrounding areas of Tempe, Mesa, Gilbert, or Chandler your fees may vary.
Part of closing costs also includes any unpaid property tax. Different cities may have different taxes to collect. Also, If you have a Home Owner’s Association (HOA) your fees also vary.
What is the housing market doing in May 2020 – See these metro Phoenix area market reports. As of May 10, 2020, Phoenix metro prices are up 8.9% over the past year!
- 😊 PHOENIX May 2020 Market Report
- 🏡 GILBERT May 2020 Market Report
- 😊 TEMPE May 2020 MARKET REPORT
- 🏡 CHANDLER May 2020 MARKET REPORT
- ☂️ What is the Average Rainfall for Phoenix?
- 💲 What are Average Closing Costs for Sellers in Arizona?
- ❓ What is a Closing?
- 🤑 Who Pays Closing Costs in Arizona?
- 💲 How to Get Closing Costs Waived?
- ❓ How Much Do Sellers Pay for Closing Costs?
- 💲 What are Examples of Seller Closing Costs in Arizona?
- ❓ Is it Normal for the Seller to pay Closing Costs?
- 🏡 What are the Costs Associated With Selling a Home?
- 🌡️ What are the Average Temperatures in the Phoenix Metro area?
- 🧾 What is the Foreign Investment in Real Property Tax Act (FIRPTA)?
- 🏡 What are Real Estate Agent Fees for Sellers?
- ⚖️ Do I Pay For an Attorney in Arizona Real Estate?
- 💲 How do I avoid Seller Expense When Selling Investments?
- 📚 Who Pays For Title Insurance in Arizona?
- 💲 Who pays for Escrow Fees? Buyer or Seller?
- Are you Selling a home AND buying a Home?
- 💲 How does Seller Loan Payoff work?
- 💵 What are other Lender Fees?
- ⚖️ What is a Home Warranty for Sellers?
- 💲 What are Home Owner Transfer Fees?
- 💲 Who pays Transfer Tax in Arizona?
- 📘 What are Seller Disclosure Fees?
- 💲 Who pays Outstanding HOA Dues?
- 🚘 What are the Courier Fees?
- 💲 When are Closing Costs paid?
- 🏗️ Who Pays Capital improvement Fees?
- 👩 Get Help from your Phoenix Real estate Agent
- 🖩 Instant Home Value Estimator
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!
We are often asked How much are closing costs for sellers in the Phoenix metro area. This article will provide information on some of the closing costs sellers can expect.
☂️ What is the Average Rainfall for Phoenix?
The driest month in Phoenix is June with 0.09 inches of precipitation, and with 1.07 inches March is the wettest month.
💲 What are Average Closing Costs for Sellers in Arizona?
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.
You may also be interested in Instant Buyers (iBuyers) in Phoenix.
❓ What is a Closing?
In Arizona, the “Closing” is when the ownership of property transfers from the seller to the buyer. There are several aspects of this transfer. The buyer and seller need to sign their closing documents. For sellers, this is signing specific documents to relinquish ownership. For buyers, this is providing their closing funds to the Title and Escrow company. if the buyer is getting a loan the also sign their loan documents. The buyers’ lender will wire the loan amount to the Title and Escrow company.
The title company ensures all parties have signed the appropriate documents and the total funds needed to close the transaction have been received. Once this happens, the Title or Escrow company will release the sale to record with the County. Once the county has recorded the sale, the ownership has transferred. In Arizona, the day of closing is the day ownership transfers, and the day the buyers receive the keys to the house. In Arizona, the date for the “closing” is the day on the purchase contract that the buyer and seller have agreed to.
🤑 Who Pays Closing Costs in Arizona?
Al buyers and sellers in Arizona will have closing costs when buying or selling property. And, typically the buyer and seller will pay their own closing costs. Buyers will typically have costs associated with their loan. Additionally, these can include lender loan origination fees, processing fees, underwriting fees, etc. Both sellers and buyers will have fees charged by the Title Company. Buyers may also have to prepay a couple of months of HOA fees.
The title company is the neutral third party that holds the earnest money, initiates communication with a Homeowner’s Association (HOA) to get the applicable fees (if the Home is in a HOA community). Also, the title company also initiates a title search of the property to ensure the seller has a clear title to pass on to the buyer.
The title company is checking for any liens against the property. Liens could include all mortgages, tax liens, mechanical liens (ie a contractor can place a lien on a property if they are not paid for work performed, such as remodeling). All liens need to be paid in full by the seller when the sale closes.
Sellers typically have to pay any taxes owed on the property since their last tax payment. If there is a HOA, they may have to pay a fee for the HOA to provide the buyer with the rules (CCRs) of the new community.
If the buyer and seller agree in the purchase contract that the seller will help with closing costs, this dollar amount is written in the purchase offer. Some buyers have enough money for a down payment but need a little extra help for their closing costs. Sometimes buyers want to reserve their cash for immediate improvements to the property or initial appliance purchase.
💲 How to Get Closing Costs Waived?
Closing costs include several things that can not be waived. Property taxes owed can not be waived. Some title companies will give a seller an investor rate if they own multiple properties. Ask your title company if you qualify for any discounts they may have available. Title companies file their rates with the state of Arizona. If a seller goes to the title company to sign their closing documents, they may not have to pay for a notary to come to their location. Most title officers are also notaries and can sign official closing documents.
❓ How Much Do Sellers Pay for Closing Costs?
At closing, sellers will need to pay off their mortgage, if any. Sellers will pay realtor commissions, any taxes due from the last payment to the closing date. Sellers will also have title fees for their portion of the work performed by the title company. Title fees are based on the price of the property. If the home is in a HOA community, sellers in Arizona are required to bay for their HOA to provide the community rules (CCRs) to the buyers. If the sellers have agreed to pay any buyer closing costs, those would be paid from the seller proceeds at closing.
💲 What are Examples of Seller Closing Costs in Arizona?
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). Additionally, the seller’s loan payoff (if any) will vary by seller. The HOA closing costs will vary by community. For example, a Chandler or Gilbert HOA may charge an HOA transfer fee and those fees can vary by HOA. There are some HOAs in Phoenix (ie Ahwatukee) that do not have a transfer fee.
When a home is sold, there are closing costs associated with the sale. Seller Closing costs will be charged whether you use a Real Estate Agent or sell the house yourself.
❓ Is it Normal for the Seller to pay Closing Costs?
It is common for sellers to pay their own closing costs. There are times when a buyer will ask a seller to help with THEIR closing costs. We typically see this in properties under $350,000. Some first-time buyers have their down payment but not enough saves for closing costs. There are also Down Payment Assistance loans where sellers may be asked to help pay closing costs. However, why would a seller do this? Whether the seller contributes, ie $3000 towards buyer closing costs or accepts an offer $3000 lower, they have the same net proceeds.
🏡 What are the Costs Associated With Selling a Home?
My clients often ask about costs to sell a home. There are the obvious expenses, such as paying off a mortgage, taxes, and real estate commissions. Sellers also need to look at the cost to get their house ready for the market. We know sellers will get a higher price for their home when it shows well. And showing well includes a CLEAN home, shinny clean windows, great curb appeal, a welcoming front door, a well-manicured landscape, and a home in good repair. Buyers are put off by dirt and clutter. You want the home to show light and bright!
After a home inspection, buyers have an opportunity to ask the seller to make repairs that may have surfaced in the home inspection. There may be cracked or broken roof tiles or mortar caps. There could be plumbing or electrical items needing attention. The cost to make these repairs are part of seller costs when selling a home.
🌡️ What are the Average Temperatures in the Phoenix Metro area?
Phoenix’s coldest month is January when the average temperature overnight is 43.4°F. In July, the warmest month, the average day time temperature rises to 104.2°F.
If you would like to see specific homes as they come on the market, click here to get email updates.
🧾 What is the Foreign Investment in Real Property Tax Act (FIRPTA)?
FIRPTA is a Real Estate Transfer Tax for Foreign Sellers. Here in Arizona we most often see this with our Canadian friends when selling a home. The Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) authorized the United States to tax foreign persons, on the sale of United States real property interests. This withholding tax is collected at the closing of the sale. This amounts to 10% of the purchase price if the sale is over $300,000. For sales less than $300,000, provided the buyer occupies the residence at least 50% of the time, there is no tax collected. This is why real estate agents may see a note in a listing that the buyer must occupy the property at least 6 months fo the year.
The problem comes when the seller is a foreign person and the property is subject to FIRPTA but no tax is collected. In this case, the buyer can be held liable for the tax.
🏡 What are 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.
Sellers want an agent experienced in negotiation. Your agent will 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 about price, closing date, or any other key items in the first 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. In addition, there may be negotiation needed regarding an appraisal if there are appraisal issues where the appraisal is below the contract price.
Should You Consider a Discount Brokerage?
Some discount brokerages may quote a lower fee than other brokerages. Be sure to ask 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 money 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 through the multiple listing system and effective marketing.
For sellers planning to put their home on the market, you may want to read about Selling Your Home Quickly in Phoenix, Arizona.
⚖️ Do I Pay For an Attorney in Arizona Real Estate?
Arizona allows real estate agents to practice contract law relative to home buying and selling. A typical real estate transaction does not involve an attorney. Buyers and sellers can always have an attorney review any paperwork they want to be reviewed. Some states, ie New Youk, for example, use attorneys as part of the transaction.
This means buyers and sellers pay extra for their services. The real estate documents used in Arizona are typically standard documents approved and provided by the Arizona Association of Realtor. These documents are updated periodically to address changes in law or to clarify particular points of the contract.
💲 How do I avoid Seller Expense When Selling Investments?
Are you familiar with a 1031 Exchange?
What is a 1031 Exchange?
The Internal Revenue Code* provides that a taxpayer may sell real property held for productive use in a trade or business or for investment and defer payment of capital gains tax if that taxpayer uses the proceeds to acquire a like-kind replacement property.
- Capital gains tax is significant
- Reinvestment into replacement property allows the taxpayer to leverage dollars that would otherwise be spent on taxes
- Allows for non-income producing property to be replaced with income-producing property
- Allows a taxpayer to diversify a portfolio and minimize risk
📚 Who Pays For Title Insurance in Arizona?
This is a title policy that a seller purchases 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 will complete research to identify any lien on the 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 more 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.
A buyer using a loan to purchase a home will purchase a title policy for their lender.
You may also be interested in reading about buying a St. Joseph Statue to sell your house.
💲 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), make sure the HOA is paid monies due from the seller at closing. They also ask 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.
Are you Selling a home AND buying a Home?
💲 How does Seller Loan Payoff work?
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.
You may also be interested in reading about Seller Disclosure Documents in Arizona.
💵 What are other Lender Fees?
Lenders charge a variety of fees to buyers when giving 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.
⚖️ What is a Home Warranty for Sellers?
When 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.
💲 What are Home Owner Transfer Fees?
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.
If you enjoy reading this, you may also like How to Sell A House With A Realtor
💲 Who pays Transfer Tax in Arizona?
The state of Arizona does not have a property transfer tax. There are several other states that collect a transfer tax to raise revenue when a property sells. Arizona does not. There have been several attempts to pass a law to collect this additional tax, however, it has been voted down.
📘 What are Seller Disclosure Fees?
Sellers in Arizona will pay 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. Additionally, 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.
If you are selling your house you may be interested in The Home Inspection Process in Phoenix.
💲 Who pays Outstanding HOA Dues?
If a seller is behind on HOA dues, these will be collected at the time of the sale of the property. Also, many HOAs have someone drive by the 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 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 earlier violations, this would need to be paid as well.
🚘 What are the Courier Fees?
Fees charged to send the loan payoff back to a lender, loan documents from the lender to the title company, etc. It is paid at closing.
💲 When are Closing Costs paid?
Closing costs are paid when the Buyer signs all final closing documents. Typically, a few days before the actual closing date.
🏗️ Who Pays Capital improvement Fees?
Some HOAs charge Capital improvement fees. These fees add to the HOA coffers to help with capital improvements, such as pool maintenance, exterior maintenance, new roofs, roads, etc. This is a fee that can be paid for by the buyer or seller but traditionally paid for by the buyer since the buyer will benefit from the upcoming improvements.
This fee is in addition to any homeowner monthly fees or transfer fees. These fees will vary by HOA. We typically see higher Capital improvement fees (also called Reserve fees) in adult communities. Many adult communities not only have a community pool or are gated. Also, you can find large community recreation centers. Often these have multiple rooms the residents use for book clubs, computer clubs, quilters, woodworking, painting groups, clay and ceramics studies, etc.
Retirement communities often have many amenities for the residents. May folks move to the retirement from other areas, both locally and out of state. These gathering places help folks find new friends. Also, these areas provide places to enjoy old hobbies or learn new ones!
What Are Closing Costs When Selling A Home in Phoenix? Continue reading!
If you are selling your home, you may also be interested in Things Buyers Really Want When they Come to Your House.
👩 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.
🖩 Instant Home Value Estimator
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. A seller and their real estate agent can negotiate many of the costs associated with the sale of a home. The buyer’s offer to buy a home includes more than just the sale price. Some buyers ask for closing cost help, or they may ask for the seller to pay HOA transfer fees. Buyers may also ask for a seller t pay for a home warranty. All these items are negotiable and can make a difference in how much a seller will net from the sale.
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Contact the Shirley Coomer Group at Keller Williams Realty Sonoran Living
Call or Text: 602-770-0643 for more Real Estate Information.
What Are Closing Costs When Selling A Home in Phoenix?