Understanding Closing Costs in Florida: Who Pays What?

Closing costs are a significant part of any real estate transaction, and understanding who pays for what in Florida can help you budget and negotiate effectively. In this post, we’ll break down the common closing costs in a Florida real estate transaction and clarify which party typically covers each expense.

Buyer’s Closing Costs

1. Down Payment: The down payment is the buyer’s responsibility. It’s a percentage of the home’s purchase price, and the amount varies depending on the type of mortgage and the lender’s requirements.
2. Loan Origination Fees: Buyers typically pay loan origination fees, which cover the cost of processing the mortgage application and underwriting.
3. Appraisal Fee: The buyer usually covers the cost of the appraisal, which assesses the property’s value to ensure it aligns with the loan amount.
4. Credit Report Fee: Buyers pay for obtaining a credit report, which lenders use to assess creditworthiness.
5. Home Inspection: While optional, a home inspection is often paid for by the buyer to assess the property’s condition thoroughly.
6. Survey: Buyers may pay for a property survey to confirm property boundaries and ensure there are no encroachments or issues.
7. Title Insurance: Buyers typically pay for lender’s title insurance, which protects the lender’s interests in the property.
8. Escrow or Closing Agent Fees: The buyer may cover fees associated with the escrow or closing agent services.
9. Prepaid Items: Buyers often prepay property taxes, homeowner’s insurance, and mortgage insurance, which are placed in an escrow account.

Seller’s Closing Costs

1. Real Estate Commission: The seller is generally responsible for paying real estate commissions to both the listing and selling agents.
2. Title Insurance: Sellers usually pay for the owner’s title insurance policy, which protects the buyer’s interests in the property.
3. Documentary Stamps on the Deed: In Florida, sellers are responsible for paying documentary stamps on the deed, which is based on the sale price.
4. Title Search and Closing Fees: These fees, associated with clearing the title and the closing process, are often paid by the seller.
5. Prorated Property Taxes and HOA Fees: Sellers may reimburse the buyer for a portion of prepaid property taxes and homeowner association fees.
6. Seller Concessions: In some cases, sellers may agree to cover a portion of the buyer’s closing costs as a negotiation strategy.
7. Release of Liens and Outstanding Obligations: The seller is responsible for resolving any outstanding obligations or liens on the property before closing.

Split Closing Costs

Certain closing costs may be split between the buyer and seller, or negotiated differently based on the terms of the purchase agreement. These can include:

• Transfer Taxes: Transfer taxes may be split between the parties or negotiated as part of the sales agreement.
• Home Warranty: The cost of a home warranty may be negotiated between the buyer and seller.
• Recording Fees: The cost of recording the deed may be allocated differently based on negotiations.

It’s important to note that while there are common practices in Florida, closing costs are negotiable, and specific arrangements can vary depending on the terms agreed upon in the purchase contract. Working with a knowledgeable real estate agent and attorney can help ensure that you fully understand and navigate the closing costs associated with your Florida real estate transaction.