It’s a great time to sell a home in Florida. The Sunshine State’s real estate market has weathered the economic uncertainty of 2020 and remains one of the most stable and promising markets in the country.
But a home sale in Florida comes with a lot of associated costs – for Florida home buyers and sellers alike. Closing costs, which come at the end of the sales process, and account for services like appraisals, inspections, and legal documents, usually add up to between 1% and 3% of the final sale price.
If you add in Florida real estate commission, which is typically 6% of the sale price, closing costs in Florida can range up to 9% of the final sale price.
For perspective, the median home value in Florida is just over $252,000, according to Zillow; 9% closing costs for a home that sold for that amount would come to $22,680.
Where is all that money going? The short answer is: a lot of different places. We’ll break it down, item by item, below. But first, let’s address a more urgent question: who’s responsible for paying closing costs in Florida?
- Who Pays Closing Costs in Florida?
- Closing Costs for Florida Home Sellers
- Closing Costs for Florida Home Buyers
- How Much Are Closing Costs in Florida?
- How to Save on Closing Costs
Who Pays Closing Costs in Florida?
In Florida, as in most other states, the seller is responsible for paying the bulk of the closing costs. That includes the real estate commission, which is by far the largest chunk of closing costs.
That doesn’t mean the buyer is totally off the hook, though. Buyers in Florida are responsible for appraisal and inspection fees, as well as costs like loan origination fees. But when you go down the list of who pays what closing costs, it’s clear that the seller has a larger financial burden.
Let’s review some common closing costs in Florida, divided up by who’s responsible for paying them.
Closing Costs for Florida Home Sellers
Before the property changes hands, you’ll want to clear the title of any liens, debts, or other obligations. This is done through the title search, a process which scours public records to look for any judgments or unpaid claims against the property. If the title is found to be clear, then it’s considered “marketable,” which means it’s ready to be passed on.
The title search also looks at the chain of ownership, to make sure the transfers between all previous owners was done correctly, so the property can be legally conveyed.
A title search in Florida generally costs between $300-$600.
Once the title search is completed, title insurance is purchased to protect against liability from any claims that might have been missed by the title search.
Who pays for the title insurance depends on where in Florida the sale is taking place. In Dade, Broward, Manatee and Sarasota counties, the buyer usually pays for title insurance. Outside those counties, the seller is often expected to pay for it. Regardless of where you are, who pays for the title insurance is very much up for negotiation, so don’t be afraid to ask.
Title insurance varies, and is calculated in Florida at a rate of $5.75 per thousand for up to $100,000, and $5.00 per thousand above that.
For reference, a home with the Florida median value of $252,000 would incur title insurance costs of $1,335.
Transfer Tax/Documentary Stamp Taxes
Every state has a transfer tax of some sort, which is essentially a fee the state charges to transfer a property from one party to the other.
Florida’s equivalent to the transfer tax is the documentary stamp. In Miami-Dade County, it’s calculated at a rate of 60 cents per $100 of the property value on the deed. Everywhere in Florida outside of Miami-Dade County, it’s calculated at 70 cents per $100 of the value on the deed.
For the Florida median home value of $252,000, this comes to $1,512 inside Miami-Dade, or $1,764 outside Miami-Dade.
In Florida, counties charge fees for producing and recording some documents associated with the sale. Using this calculator provided by Manatee County, recording ten pages for a two-party sale of a $250,000 home costs $86.50.
From this example, we can safely project that recording fees will be in the neighborhood of $100.
Mortgage Payoff/Prepayment Penalty
If you have an outstanding balance on your mortgage at the time of the sale, you’ll have to settle it with your sale proceeds. This is where the mortgage prepayment penalty comes in.
Not every mortgage contract contains a prepayment penalty, but some do. You’ll want to review the fine print on your financing agreement to figure out if this is a fee you’ll have to address.
Why do you have to pay a penalty for paying off your mortgage early? By shortening the overall length of your loan, you’re costing the lender interest they otherwise would’ve collected. Including a prepayment penalty is their way of protecting themselves from this lost revenue.
Prepayment penalties are generally 3%-4% of the loan. So if you’ve financed $200,000, your prepayment penalty will probably be between $6,000 and $8,000.
Real Estate Commission
This is the big one. Real estate commission is typically 6% of the final sale price, and Florida real estate agents are paid by the seller. The main reason that commission is handled like this is that the seller is simply more able to pay the commission, since they’re the one receiving the money in the transaction.
On top of that, you could argue that both agents actually work for the seller. The listing agent markets and shows the home, and the buyer’s agent brings a qualified buyer to the table. While they do exert some downward pressure on the final sale price, their presence benefits the seller by bringing a qualified lead to the property.
A 6% real estate commission for a $252,000 house comes to $15,120.
You can use our agent-matching service to get connected with agents who charge much less than the average Florida listing commission of 2.82%.
Sellers Should Use a Seller’s Net Sheet
A seller’s net sheet is a document that lists all the typical Florida closing costs, with blanks to fill in specific values. This sheet will usually be filled out by the listing agent, and it gives the seller an up-to-date look at exactly how much they stand to clear from the home sale.
A seller’s net sheet helps the seller keep track of where exactly all the money is going, how much is going towards various costs, and, if they use a different net sheet for each of the offers they receive, provide an easy way to compare offers side-by-side.
Closing Costs for Florida Home Buyers
In Florida, and in general, buyers are on the hook for fewer closing costs than sellers. This is largely due to the simple fact that sellers are receiving the big payout here, and can more easily afford to pay a larger share of closing costs. On the other hand, adding a lot of closing costs to a buyer’s already significant financial burden could slow down or even imperil the sale.
Still, buyers are expected to pay a handful of closing costs, most of which are related either to their financing, or making sure there are no serious problems with the property or its valuation.
Loan Origination Fees
Lenders typically charge a small fee to open a mortgage account. This fee is usually around one-half of 1%, up to 1% of the loan amount.
For a $252,000 home, that comes to $2,520 or less.
Credit Report Fees
As with any other financial contract – a car loan, a credit card, or an apartment lease – the mortgage lender will begin processing your application by pulling a full credit report. The buyer is responsible for paying for this; in Florida, the average costs are $175-$200.
Title Search Fees
A title search scours a property’s background for outstanding liens, unpaid taxes, open permits, and easements. In Florida, a typical title search runs between $100-$250.
Home Inspection Fee
The buyer will want to have the property inspected, just to make sure there are no undisclosed or undiscovered problems with it. If flaws are uncovered by the inspection, the buyer can ask the seller to make the repairs, credit the buyer for the cost of repairs, or, in extreme cases, exercise an inspection contingency to dissolve the sale.
The average cost of a home inspection is $279-$399.
The lender will order a home appraisal to make sure the home’s objective value is in line with the amount of money they’re loaning the buyer. If the appraisal comes in low, the two parties may have to go back to the negotiating table.
In Florida, a home appraisal costs, on average, $500, or slightly higher with certain types of loans.
The survey establishes the precise borders of the property being sold. It’s not uncommon for a survey to reveal that a property is larger or smaller than assumed, especially in places like subdivisions, where fences are often assumed to represent exact borders, but have often been indifferently placed.
In Florida, a survey costs $200-$800, depending on the size of the property being surveyed.
This fee is paid to the settlement agent, or escrow holder, for services rendered. In Florida, this fee is often paid by the buyer, but can also be negotiated between the two parties.
The average settlement fee is $500-$800.
How Much Are Closing Costs in Florida?
Total closing costs in Florida typically come to 9%-10%, but they aren’t split down the middle between buyer and seller. Let’s look at a pair of charts that lays out how much each party is responsible for.
|Seller’s Closing Costs
|Documentary Stamp Tax
|Mortgage Prepayment Penalty
|Real Estate Commission
Now let’s take a look at the buyer’s closing costs.
|Buyer’s Closing Costs
As you can see from the charts above, sellers in Florida pay almost six times as much in closing costs as buyers in Florida. However, when you consider who’s making money, and who’s paying it out, the imbalance makes a lot of sense.
Cutting Closing Costs
As the numbers show, the average Florida home will come with nearly $29,000 in closing costs, if not more. If that number makes you a little queasy, you’re not alone. Luckily, there are proven ways to reduce your Florida closing costs without trying to make the leap into selling as a full-on for sale by owner (FSBO) listing.
Ask for Concessions
In Florida, as in most other places, nearly every facet of a sale is up for negotiation. That includes closing costs and commission. If the seller is motivated, buyers can often win valuable concessions by simply asking.
Government fees are non-negotiable; you can’t go to a competing courthouse if you don’t like your county courthouse’s recording fees. But for fees like title insurance, home inspections, and home appraisals, getting several estimates will often reveal wide big price disparities.
A good general rule to use when it comes to fees is that government costs are usually not negotiable, while services from private companies can either be negotiated, or you can comparison-shop for the best rate.
Let’s quickly break the fees down into negotiable and non-negotiable categories.
- Title insurance
- Title search
- Real estate commission
- Documentary stamp tax (local/state government fee)
- Recording fees (local government fee)
- Mortgage prepayment fee (this fee is defined in your mortgage agreement, and will not be negotiable once you’ve signed the contract)
- Loan origination fee (this is technically “negotiable,” but you may have to accept a higher interest rate on your loan, which could cancel out any savings)
- Title Search
- Home Inspection
- Survey Fee
- Settlement Fee (this fee is negotiable in the sense that responsibility for payment can be negotiated between buyer and seller)
- Credit Report Fee
- Home Appraisal Fee (although this is a third-party service, it’s done at the direction of your lender, so it will be difficult for you to negotiate with them)
Use a Full-Service Agent at a Discount Price
Commission makes up over half of the typical closing costs, so it represents the biggest opportunity for savings. While the 3% buyer’s agent commission is typically non-negotiable, the listing agent’s commission can be reduced by using a discount brokerage.
The drawback to that is that most discount agents also reduce their service offerings in proportion to their reduced pay.
Thankfully, you can save thousands on your home sale by using our agent matching service to find full-service realtors who charge a commission far lower than the Florida average of 2.82%.