Closing Costs for Seller

Closing Costs for Seller

If you're a homeowner in Georgia, you are probably aware of the closing costs when you had purchased your property.

Now, when you are on the other side of the purchase, a seller, you'll be looking at closing costs again. These costs may range between 5 percent to 10 percent of the price. This cost will include title fees, property taxes, lien search charges, and commissions.

Here is a breakdown of the closing costs you should expect when selling your property in the Peach State.

1. Real Estate Commission

The commission you pay your agent or firm will be one of the most significant contributors to your costs when selling your home. These commissions do vary. Some might charge you a percentage of the price, while others might charge a flat fee.

Usually, a rate of 5-6 percent is considered the norm. However, when shopping for an agent or firm, you should know that these costs are open to discussions. Commission fees generally include services such as hosting open houses, including staging, marketing, professional photography, maybe even a dedicated website for your home, as well as listing postcards.

When selecting, you should compare the services offered by the firms or agents, including experience, success rates, and past performances.

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2. Transfer Tax

In Georgia, sellers are required to pay a transfer tax whenever there is a transfer for ownership of a property. This tax will need to be paid before the title deed is recorded in the superior court. The transfer tax is dependent on the sale price of the property.

While the law states that this cost is to be paid by the seller, it is relatively common for the parties to negotiate that the buyer pays the transfer tax instead.

3. Mortgage Payoff

If you have any outstanding balance on an existing mortgage, this will be added to your costs; this is an excellent time to consult with your lender to get a fair idea of the payoff.

The final payoff amount might be a bit higher as it will factor in any prorated interest through the closing date and miscellaneous, including a pre-payment penalty.

If you have a credit line that uses the house as collateral, that too will need to be paid off. All liens must be met at the closing time, so it is essential to include these in your calculation before you sell.

4. Pest Inspections

Some lenders will need the buyer to conduct a pest inspection before the purchase. Certain loans such as the VA loans will require that you pay for this inspection. These sorts of assessments will usually cost around $100-$150.

5. Lien Search

Before you can transfer your real estate, a third-party title search is conducted to confirm that there are no outstanding liens or payments on your property. You will need to settle any such encumbrances before you can sell your house, and this process would cost you anywhere between $200 and $400.

During this title examination, a third party also confirms the chain of title. The chain of the title looks at the property's history, starting from the original owner to the current owner. This examination verifies that the sale occurred by the book, and there is no disparity in the title.

Once the examination has been completed, the title company issues title insurance; this protects the new owners from any challenges or issues in the title that the investigation may have missed. The cost of title insurance is calculated on the property's price, and the payer will be decided between the buyer and you, the seller.

Depending on Georgia County, it may be customary for either you or the buyer to pay for title insurance. You will need to make sure that this is negotiated well in advance.

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6. Title & Escrow Charges

Once you near closing, there will be fees about drawing up the closing documents and your representation in the closing process. In Georgia, it is legally required for an attorney to conduct the closing process.

The attorney's role is to ensure that all the documents are in place and that title is clear. The buyer usually pays the closing costs, which typically amount to $500-$1,000.

However, as with all the other fees, this too can be negotiated. Make sure that this is discussed and mentioned in the agreement.

7. Buyer's Closing Costs

If the buyer is getting a mortgage, they may try to get your help with closing costs. Most lenders will permit you to pay a certain percentage of the buyer's expenses. When negotiating and calculating these costs, make sure you are aware of your expenses to know how much you can afford.

8. Property Taxes

Property taxes in Georgia are paid in arrears; this means that bills are sent out after October and latest, by December, and the tax is assessed for the year just completed. For this reason, property sales will include a prorated property tax credit to the buyer.

At the end of the year, the buyer will be liable to pay the year's taxes fully. If the annual taxes on your property are $4,000, and the closing ends at the beginning of April, you will have to credit the buyer the taxes for the three months of the year before the purchase ($1,000). At the end of the year, the buyers will pay the $4,000 property taxes owed.

9. Additional Fees in Georgia

Like many other states across the country, Georgia requires real estate transfer taxes when a property changes ownership. While it is the norm for you, the seller, to pay these fees, it's a common practice that the responsibility is passed to a buyer during the negotiations.

10. Home Warranty Fees

You may also choose to offer a home warranty if some aspects of the property might need a bit of touch-ups, such as the water heater, or air conditioning.

While providing a home warranty is optional, it may make your home more competitive in the market. A one-year home warranty would typically cost you between $350 and $650.

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