Closing Costs

There are certain standard costs associated with closing the sale of a house. These fees are split between the buyer and the seller, as spelled out in the sales contract.

As we help you to negotiate the sales contract, we will not only work to get the sales price you want, we will also work to limit the number of closing costs for which you will be responsible.

We will walk you through the closing costs, answering any questions you may have explaining which costs are decreed by law to be yours and which are negotiable.

Good Faith Estimate
Buyers will receive a “Good Faith Estimate” of closing costs at the time the loan application is submitted to the lender. The estimate is based on the loan officer’s past experience. We will be glad to review the “Good Faith Estimate” with you, answering any questions you may have.

  • Loan Origination Fee: This covers the administrative expenses in setting-up and processing the loan. The loan origination fee may be a percentage of the mortgage amount.
  • Points (Optional): An option for the home buyer is to pay points to lower the interest rate at which the loan will be repaid. Each point equals 1% of the mortgage amount. For example: On a $150,000 loan, 1 point would equal $1,500.
  • Appraisal Fee: The fee for having the house appraised may be incorporated into the closing costs or payment may be required by the lender at the time the loan application is submitted.
  • Credit Report: The lender uses a credit report to determine the creditworthiness of the loan applicant. This fee is often paid when the loan application is submitted.
  • Interest Payment: Typically the buyer is required to pay interest on the mortgage loan to cover the time between the closing date and when the first mortgage payment period begins. For example: If closing is on May 15, your first monthly payment begins to accrue interest on June 1 with your first mortgage payment due July 1. At closing an interest payment covering the accrual period between May 15 and May 31 may be required.
  • Escrow Account: This is an account in the custody of a third party, such as the closing agent where the buyer’s good faith deposit is held until closing.  At closing, the buyer’s good faith deposit is typically dispersed back to the buyer in the form of a credit on the closing statement. However, if the buyer has illegally failed to perform or has breached the contract, then the deposit may be dispersed to the seller.
  • Property Taxes: This is one closing cost that is often prorated between the buyer and seller. If the seller has already paid the annual property taxes, the buyer typically reimburses the seller for the period in which the buyer will be occupying the property. Likewise, if the taxes have not yet been paid, the seller typically reimburses the buyer for the period in which the seller occupied the property.
  • Transfer Taxes and Recording Fees: This is the cost for transferring ownership of the property and recording the purchase documents. The fee is often calculated as a percentage of the sales price.
  • Homeowner’s Insurance: This insurance covers replacement costs for damages cause by fire, wind or other disasters that might affect the value of the property. Typically, the insurance also includes personal liability and theft coverage.
  • Flood Insurance: Additional hazard insurance coverage that is required for homes located in a designated hazard zone as established by the Federal Emergency Management Agency (FEMA). As we tour houses, we will be happy to help you correspond with your insurance agent to confirm that the property does not reside in a hazard zone.
  • Private Mortgage Insurance (PMI): Insurance required for conventional mortgage loans when the borrower’s down payment on the house is less than 20% of the loan value.
  • Title Insurance: This policy protects both the buyer and lender by insuring a clear chain of title. It insures that the person who sells the house has the legal right to do so.

Tips On Getting The Best Return On Your Staging Efforts

The truth is that most home improvements don’t increase the value of your house as much as they cost. If you are getting ready to move and want to make home improvements that actually increase the perceived value of your house, then you may want to consider the following list that was compiled by a HomeGain survey of thousands of professional Realtors. This list will help to give you the most bang for the buck in your efforts to stage your home properly during the sales process:

  1. Clean / de-clutter – 973% Average Return on Investment: Remove clutter preferably by renting a storage space, selling any excess items, or at the least, store in your garage temporarily. Keep every room very clean when you know the home will be shown by a real estate professional with their prospective buyers.
  2. Lighten and brighten – 865% Average Return on Investment: Replace any burnt-out bulbs and use higher wattage bulbs, if possible. Have defective electrical components repaired or replaced. Make sure skylights are clear and keep drapes open during the day.
  3. Yard – 426% Average Return on Investment: Store away personal effects from front yard. Hire gardener or landscaper to trim back the overgrowth and maintain yard. Make sure that your lawn has a healthy green appearance.
  4. Plumbing and electrical – 260% Average Return on Investment: Consider repairing or replacing any defective plumbing or electrical items in your home.
  5. Professional Staging – 251% Average Return on Investment: Consider hiring a professional, licensed staging consultant to identify and enhance all the specific details that are unique to your home. The detailed enhancements of a professional go a very long way.
  6. Update kitchen and bath – 168% Average Return on Investment: Update kitchen and baths by resurfacing cabinets or painting with neutral color. Replace toilet seats, dated fixtures and drawer/cabinet handles. Freshly caulk and redo grout in countertops, sinks, tubs and showers.
  7. Paint interior – 148% Average Return on Investment: Repair any damaged interior walls by patching all chips, holes and cracks; then touch up or repaint interior walls with neutral color.
  8. Carpeting – 104% Average Return on Investment: If carpets are only lightly soiled, shampooing and/or spot removal should suffice. If there are rips, fading, heavy wear, smells or deep stains, replace with neutral color.
  9. Flooring – 101% Average Return on Investment: Repair and refinish damaged floors, or cover with neutral-colored wall to wall carpet and note damage in your disclosure.
  10. Paint exterior – 76% Average Return on Investment: Repaint or resurface the outside walls of house, as needed. Patch and repair any damaged areas.