If you are thinking of selling your home in the Richmond, Virginia area, there are a couple of things you want to know from your listing agent – what’s my home worth, how are you going to market my home AND what are the closing costs I am going to have to pay! Click here to see my latest video on the seller’s closing costs!
Seller’s closing costs are really those costs you, the seller, have to pay in order to get your home sold and closed! Closing costs will vary from state to state, so if you are reading this and you live in another state, you need to make sure you talk to your Realtor to find out what your area’s closing costs are!
Below is a breakdown of the closing costs sellers in the Richmond area should expect to pay!
GRANTOR’S TAX
The Grantor’s Tax is really nothing more than a transfer tax that the state will assess on the transfer of your property. This is generally split between the seller and buyer. I believe that it is currently at $3.50 per $1,000 of purchase price! However, the seller picks up $1 per $1,000 of purchase price and the remainder is paid by the buyer!
COMMISSION
When you list your home for sale, you will negotiate the total commission with your listing agent. When your listing agent puts the home into our local MLS, they agree to give up a portion of that commission as payment to the buyer broker who brings the buyer of your home. All commissions are negotiable between you and the listing agent so you need to take that into consideration when you are looking at your closing costs!
TERMITE INSPECTION
All lenders will require the seller to provide a termite inspection report from a licensed pest control company within 30 days of the closing to ensure that the property is free from wood destroying insects, such as termites, powder post beetles and carpenter ants. Normally, this will run about $75 to $100 depending on the pest control company. If wood destroying insects are found, then you will most likely need to take care of treating for these and that would be an additional cost!
WELL AND SEPTIC INSPECTIONS
If your home is on a well and a septic system, then you will also need to have these inspected as well. For the well, the contract will normally require that you provide a report from a certified lab showing that the well is free from contamination by coliform bacteria. If the buyer is getting a VA loan, then there is an additional test that must be done on the water showing that it is also free of lead contamination. For the septic system, the contract would require that the inspection shows that there is no evidence of malfunction. Many buyers may ask for the system to not only be visibly inspected, but also have the septic system pumped and the distribution box and all tanks inspected. If the septic system does not function properly, you may have an additional cost to repair and/or replace the system.
HOME WARRANTY
If you do decide to convey a home warranty to the buyer, then you should also figure this cost into your closing costs. A home warranty can run as high as $700 or higher, depending on the policy provider.
HOME OWNERS ASSOCIATION DISCLOSURE PACKAGE
If you live in a neighborhood that has an HOA, the contract will require you to provide to the buyer a Resale Disclosure Package. The buyer will then have a 3 day review period once they receive it. Some of the HOA management companies may require payment up front before providing the package, some may allow the package to be paid for at closing. There are some neighborhoods in the Richmond area that have 2 associations – a neighborhood like Raintree or Charter Colony may have a neighborhood association package and then may have what is called a Master Association package. If you live in a neighborhood where there are 2 associations, please keep in mind that both packages must be ordered and the buyer’s 3 day review period does not start until both packages are received!
SETTLEMENT FEE TO THE ATTORNEY
When you go to closing, you will meet with your attorney or title company, who will prepare the deed and a few other pieces of paperwork for you to sign. This will then be couriered to the buyer’s attorney or title company, who will complete the buyer’s side of the closing and then record the deed at the courthouse and disburse funds to pay off things like your mortgage and repair invoices, etc. This closing fee should be taken into account when you are estimating your closing costs!
ADMIN FEE
Many brokerages are now charging an Admin fee. This fee is used to help offset the costs of meeting additional paperwork and regulatory requirements. This fee will vary from brokerage to brokerage and should be included in your closing costs estimate!
PRORATIONS
At closing, there will be certain items prorated. This will include taxes, oil tank, HOA dues, etc. At the time of listing, there will be no way to give an exact estimate on these, as the actual proration will be determined by the actual costs and the date of closing.
These are the most common closing costs you will see. There may be others and your Realtor should be able to discuss that with you. Once you get a contract, your Realtor will be able to give a much better estimate of your closing costs as the contract will let you know what closing costs, if any, the buyer may be asking for, what the closing date is, etc.
If you are thinking of selling your home and you want to see what your home may be worth in this market, please feel free to let me know and I would be happy to assist! No obligation – no pressure!
