The process of selling a home in Virginia can be overwhelming, and closing costs are an often-overlooked but important element of the sale. At historichomesinvirginia.com , we understand that, as a seller, you want to understand your rights and obligations upfront. Accordingly, this article will demystify all the costs associated with closing a sale in Virginia.
What is Included in Closing Costs?
Closing costs typically include a wide range of fees associated with the sale transaction, such as title search fees, recording fees, transfer taxes, attorney’s fees, home warranty fees, and more. The common denominator among all these fees is that they are out-of-pocket expenses that must be paid by the buyer or seller (or sometimes both) before the title to the property can be transferred.
Who Pays for Closing Costs?
The specific fees involved in a closing in Virginia are largely dependent on whether the buyer or the seller is responsible for the payment. While there is no hard and fast rule to who pays these costs, the traditional approach used by most buyers in Virginia is that the buyer pays for any fees related to the loan application and title search, while the seller pays for any title insurance, deed preparation, and title recording fees. The basic breakdown of closing costs looks something like this:
- For the Buyer: Loan Origination Fee, Appraisal Fee, Home Inspection Fee, Credit Report Fee, Pest Inspection Fee
- For the Seller: Document Preparation Fee, Deed Recording Fee, Transfer Tax, Title Insurance, Attorney’s Fees
Common Closing Costs in Virginia
Sellers in Virginia should allow for approximately 10-15% of the sale price for closing costs in addition to their agent’s commission. For example, if your list price is $400,000, you should expect to pay at least $48,000-60,000 in closing costs. The actual amount of your closing costs will depend on a variety of factors, including the size of the sale and how much the buyer has negotiated into the contract. Here are some of the more common closing costs in Virginia:
- Document Preparation Fee – This fee is charged by the escrow company for preparing all the necessary documents for the sale.
- Deed Recording Fee – This fee covers the cost of having the deed recorded in the public records in the county where the sale property is located.
- Transfer Tax – In Virginia, the seller is responsible for paying the transfer tax, which varies from county to county.
- Title Insurance – Title insurance protects the buyer from any issues with the title or ownership of the property, and the seller is responsible for obtaining it.
- Attorney’s Fees – Both the buyer and seller may need to use a lawyer when buying or selling real estate in Virginia, and the attorney’s fees are shared between them.
When Are Closing Costs Paid?
Closing costs in Virginia are generally paid at the same time as the downpayment, usually right before closing. The seller will sign off on the closing statement, and then the funds will be dispersed to pay the various closing costs as well as the real estate agents’ commissions. The buyer will receive the keys to the house once all the funds have been distributed.
How Can I Reduce Closing Costs?
Even though sellers in Virginia typically have to pick up the tab for the majority of the closing costs, there are several ways to reduce the amount you end up paying. One of the simplest ways to do this is by negotiating a lower sales price, since closing costs are generally a percentage of the sale price. In addition, it’s important to shop around for the best deals on title insurance, document preparation, and attorney’s fees to ensure you’re getting the most bang for your buck. Finally, make sure that you read through the purchase agreement thoroughly to ensure all the fees are accurately listed and agreed upon.
At historichomesinvirginia.com, we understand the complexities of selling a home in Virginia and hope this article has brought some clarity to the final stages of the process. If you still have questions, please contact us so we can help you make the best decisions when it comes to closing costs on your sale.