You’ve likely heard about closing costs, but do you know everything that they include? Check out our closing cost “FAQ” to learn more about what closing costs are all about.
What Are Closing Costs Exactly in Connecticut?
Closing costs refer to all of the fees that must be paid at the closing table. Depending on where you live, the fees and costs can vary. But generally, closing costs include, but are not limited to:
- Notary fees
- Transfer Costs
- Transfer Taxes
- Appraisal Costs
- Inspection Fees
- Origination Fees
- Recordings Fees
- Title Insurance
- Underwriting Fees
- Bank Fees
- Courier Fees
- Wire Transfer Fees
- Liens against the home will need to be paid to clear the title
- Credit Report Fees
- Administrative Fees
- Attorney Fees, If Applicable
- The balance of your mortgage or loans against the home
- Possibly repairs or pest control if this has previously been agreed upon
- COMMISSIONS!
Who’s Paying?
While the buyer will usually pick up a number of theses, it is important to note, that the seller typically pays 100% of the commission. This will be about 6%+ of the final sale price although this is not a fixed number. This is important to keep in mind when selling a home, you very much have the right to negotiate the realtor commissions. Obviously you need to use some discretion as you don’t want to insult the realtors who are involved with the sale of your home by offering them very low commission percentages. Other than your possible mortgage balance, this is by far the biggest cost when it comes to costs at the closing table. Typically commissions take up the majority of the closing costs percentage which is generally around 10%, 6% for commissions and 4% for the remaining fees/costs. Negotiating the other costs during the sale process is becoming increasingly popular. In an effort to lure in more buyers, sellers are more frequently picking up the tab when it comes to the closing costs. Again, there is no rule or law in place that states that sellers HAVE to pay the commissions. If the situation presents itself, this could definitely be negotiated.
As a seller, you will also need to pay your share of the year’s property tax, up until the day of closing. Any HOA fees or other community costs should be prorated and paid at this time as well, as well as oil costs if the house has an oil tank.
What Are Seller Subsidies?
This is an amount negotiated between the buyer and seller. It is the percentage the seller agrees to pay towards the closing costs. For example, you can offer to put 3k towards closing to help relieve some of the costs for your buyer. Overall, paying these subsidies are often a small price to pay to bring buyers to the table! Keep in mind, this cost can come right out of the proceeds from the sale, so you don’t have to worry about writing a check etc. The attorneys handling the closing would take care of this part of the contract.
Can You Avoid These Costs?
Yes! By working with a direct buyer who will pick up all costs associated with the closing! A direct buyer will not charge you a commission, as they are not an agent. Many times, direct buyers will offer to pick up all costs, which will save you money and hassle at the closing table. Some companies like Fair Home Offers CT also offer a specialized Preserved Equity listing for certain sellers where you, the seller, do not pay any commissions nor do you pay any closing costs. These are all covered by Fair Home Offers CT!
Are Repairs Included?
This is another one that is negotiated between the buyer and the seller. If the home is in need of some obvious repairs, the seller will often take care of these before putting their home on the market. However, if an inspection shows additional repairs are needed, a buyer may make his offer contingent on repairs being made. A buyer and seller can work this out before going to closing.