Closing Costs
Whether you’re buying or selling a home in the beautiful Melbourne area, you’ll find yourself needing to factor in closing costs that will change the final price of the transaction. At times, buyers can feel like they price of their new home has just increased out of nowhere. It’s important to remember that closing costs are standard and even the seller of the property will run into them when the transaction is wrapping up.
Why Every Sale Has Closing Costs
When the sale of a home is nearing completion, the final transfer of ownership between parties takes place. This happens only once all loans are approved, the buyer and seller are in agreement and the broker or real estate agent has completed their work as well. Once closed, the buyer is now the rightful owner of the property taking on the tax obligations and any mortgages needed to secure the sale.
While the buyer only has to make sure the funds are sent to the seller by the bank, the seller often has to pay off the previous mortgage on the home as well as any other liens on the property. These can be other loans, second mortgages or home equity loans and lines of credit.
Taking care of each of these tasks is handled by a third party to provide fair and professional managing of the documents and funds that are changing hands. Removing the involved parties from these steps helps make sure that nothing dubious occurs during the process.
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These Services Charge Each Party Separate Closing Costs
Closing costs are assessed to each party, but buyers are often on the hook for more fees associated with closing than the seller. These aren’t to be confused with commissions the real estate agents will collect. Closing costs are assessed separately and tend to end up being 1% and 7% of the home’s sale price, with 5% being a common middle ground.
Higher closing costs facing buyers tends to be offset by the responsibility of agent commissions being taken on by the seller, paying commission for both agents used by each respective party. If you’re selling your home with little or no profit, these expenses will be coming out of pocket and are required to finish the sale.
Understanding the different costs associated with closing requires an intimate knowledge of the local and state laws surrounding the allowable amount to be charged for closing costs. Having these insights can also help make sure that only the required amounts are paid, and that all fees the closing company are charging are in fact applicable.
