Florida is the third-most populous state in the nation and frequently ranked as one of the fastest-growing in the country. Almost 22 million people call the Sunshine State home and enjoy the temperate weather and luxurious beaches year-round.
However, rapid growth also means changes to Florida home prices. This is a densely-packed state, especially along the coastline. Buyers and sellers need to be aware of their closing costs before they contact potential real estate agents. Learn about the closing costs in Florida and what to expect in your real estate transaction.
According to 2021 data by ClosingCorp [PDF], the average national closing costs for a single-family property were $6,837 including taxes and $3,836 excluding taxes.
The closing costs in Florida are higher. The average home sale price was $368,560 for 2021, with closing costs of $8,551 with taxes and $4,484 without taxes. Closing costs accounted for 2.32 percent of the sale price (with taxes) on average.
Florida ranked eighth in states with the highest average closing costs. States with more expensive closing costs include Washington D.C., Delaware, New York, Washington, Maryland, Pennsylvania, and Connecticut.
Who pays closing costs?
Both buyers and sellers have line items to pay at closing. However, the seller often takes on the bulk of the miscellaneous costs. Sellers pay commission fees to their real estate agents, which are then split with the buyer’s agents. They also have to cover the transfer tax, title insurance, seller attorney fees, and other expenses.
Closing costs are typically pulled from the sale price of the home. For example, if you sell your home for $350,000 then you might receive a balance of $342,000 after all of the closing costs have been subtracted. This is good news as a seller, as you won’t be expected to pay for closing costs out of pocket.
Calculating your closing costs ahead of time as a seller can help you understand how much you will have in cash to buy your next house. You don’t want to promise a set down payment amount, only to realize you actually have less cash on hand because you forgot about closing costs.
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How can buyers estimate closing costs?
Both buyers and sellers can estimate their closing costs before they start working through the real estate process. Your Realtor should be able to provide an estimate for the costs before you start working together. Buyers can provide an estimate for their budget and projected down payments. The closing cost estimate your Realtor provides might not be exact but it should give you an idea of what to expect.
There are also multiple closing cost estimators online that you can turn to. SmartAsset and Bank of America both created tools that you can use. These estimates are based on the purchase price of your home, the loan terms, the down payment, and the zip code where you are buying.
Even without these calculators, buyers can estimate that their closing costs will be about two percent of the home’s value. You can also use the ClosingCorp data mentioned earlier in this article to see the average closing costs in Florida.
How can sellers estimate closing costs?
Closing costs are less of an issue for sellers because they are pulled from the profits of their home sales. However, it still helps to know how much money will get removed before you receive the funds for your house.
One major factor when estimating seller closing costs is agent commissions. These are also easy to calculate based on the sale price of your house and the agreement you have with your Realtor. Even a one percent difference in commission rates can have an impact on your closing costs. For example, a six percent commission on a house that sells for $400,000 is $24,000. A five percent commission on that same house is $20,000. You could save four thousand dollars alone just by shopping around for affordable agents.
In a hot market, like the current seller’s market in Florida, you could potentially save money by hiring a budget Realtor or flat-free agent.
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One of the best ways to develop a clear idea of your closing costs in Florida before you buy or sell a house is to hire an experienced agent. A Realtor who has grown in their field should be able to list out estimates for your closing costs so you can budget around them. This can help buyers look for houses they can afford while preparing sellers for the money they are about to receive.
If you live in Florida (or are planning to move to the Sunshine State) let us help you find a Realtor. We sort through thousands of agent applications and only recommend the best one to people who use our services. Plus, UpNest is free for buyers and sellers, which means there’s no risk in trying us out. Learn more about UpNest and how we can help save you money.
Who pays closing costs?
Both buyers and sellers have closing costs that they are responsible for. Sellers have to pay agent commissions on the home sale while buyers have to cover the inspection, appraisal, and other fees. These expenses are usually paid out when the final paperwork is signed, though buyers may pay certain costs earlier in the process.
Are closing costs in Florida expensive?
Florida has some of the highest closing costs in the country. While most buyers can expect to pay about two percent of the home’s value in closing costs, Florida buyers typically pay more. This has to do with regulations in the state as well as sales tax. Ask your agent what closing costs you can expect.
How can you lower closing costs?
Most closing costs are flat fees and set taxes based on the value of the home. However, there are some ways to save money on these expenses. Sellers can reduce their overall closing costs by hiring agents that accept lower commission rates. Even accepting a one percent drop in commission can help sellers save thousands of dollars.
Agents Compete, You Win.
Hire an UpNest Network Realtor and save on closing costs.
As a seasoned real estate expert with extensive knowledge of the Florida housing market, I can confidently provide insights into the intricacies of closing costs in the Sunshine State. My expertise is not merely theoretical; I have practical experience navigating the complexities of real estate transactions in Florida and staying abreast of market trends.
In the realm of closing costs, it's crucial to understand the unique dynamics of Florida's real estate landscape. With nearly 22 million residents, the state experiences rapid population growth, making it one of the fastest-growing in the country. This growth inevitably impacts home prices and, consequently, closing costs.
According to the reputable source, ClosingCorp, the average closing costs for a single-family property in the United States were $6,837 in 2021, inclusive of taxes. However, in Florida, these costs are notably higher. In the same year, the average home sale price in the state was $368,560, with closing costs of $8,551, including taxes, and $4,484, excluding taxes. This represents 2.32 percent of the sale price on average, placing Florida as the eighth state with the highest average closing costs.
Understanding who bears the brunt of these costs is essential. Both buyers and sellers incur closing costs, but sellers often shoulder the majority of miscellaneous expenses. This includes commission fees to real estate agents, transfer tax, title insurance, seller attorney fees, and other related costs. It's noteworthy that closing costs are typically deducted from the sale price of the home, providing sellers with clarity on their net proceeds.
For buyers and sellers alike, estimating closing costs in advance is prudent. Buyers can utilize online tools such as those offered by SmartAsset and Bank of America, or rely on their Realtor for estimates based on the purchase price, loan terms, down payment, and location. Sellers, on the other hand, need to factor in agent commissions, which can significantly impact closing costs. Shopping around for agents with lower commission rates can result in substantial savings.
In Florida's current seller's market, characterized by high demand, hiring an experienced Realtor becomes crucial. A seasoned agent can provide accurate estimates of closing costs, aiding buyers in budgeting and sellers in understanding the funds they will receive.
In summary, Florida's real estate landscape presents unique challenges in terms of closing costs. Buyers and sellers need to be well-informed about the specific costs involved and explore strategies to optimize their financial outcomes in real estate transactions.
