You’ve likely heard about closing costs, but do you know everything that they include? Check out our closing cost “FAQ” to learn more about what closing costs are all about.
What Are Closing Costs Exactly in Kansas City?
Closing costs refer to all of the fees that must be paid at the closing table. Depending on where you live, the fees and costs can vary. But generally, closing costs include, but are not limited to:
- Notary fees
- Transfer Costs
- Transfer Taxes
- Appraisal Costs
- Inspection Fees
- Origination Fees
- Recordings Fees
- Title Insurance
- Underwriting Fees
- Bank Fees
- Courier Fees
- Wire Transfer Fees
- Liens against the home will need to be paid to clear the title
- Credit Report Fees
- Administrative Fees
- Attorney Fees, If Applicable
- The balance of your mortgage or loans against the home
- Possibly repairs or pest control if this has previously been agreed upon
- COMMISSIONS!
Who’s Paying?
While the buyer will usually pick up a number of theses, it is important to note, that the seller typically pays 100% of the commission. This will be about 6%+ of the final sale price. Other than your possible mortgage balance, this is by far the biggest cost when it comes to costs at the closing table. Negotiating the other costs during the sale process is becoming increasingly popular. In an effort to lure in more buyers, sellers are more frequently picking up the tab when it comes to the closing costs.
As a seller, you will also need to pay your share of the year’s property tax, up until the day of closing. Any HOA fees or other community costs should be prorated and paid at this time as well.
In Kansas City, the allocation of closing costs between the buyer and seller is typically negotiable and can be influenced by local customs, market conditions, and the terms of the purchase agreement. Here are some general guidelines regarding who typically pays certain closing costs:
Buyer’s Responsibilities:
- Loan-related fees: Buyers are typically responsible for fees associated with obtaining a mortgage loan, such as application fees, credit check fees, appraisal fees, and any loan origination charges.
- Inspection costs: Buyers typically bear the expenses of any inspections they choose to conduct, such as home inspections, pest inspections, or radon testing.
- Title-related fees: Buyers often pay for the lender’s title insurance policy and any fees associated with the title search and examination.
- Escrow-related fees: Buyers may be responsible for the costs associated with an attorney or escrow agent who handles the closing process.
- Prepaid expenses: Buyers usually cover prepaid expenses, such as property taxes, homeowner’s insurance premiums, and prepaid interest on the mortgage.
Seller’s Responsibilities:
- Real estate agent commissions: In most cases, the seller pays the commission for both the buyer’s and seller’s real estate agents.
- Title-related fees: The seller is typically responsible for the owner’s title insurance policy and any fees associated with clearing the title.
- Transfer taxes: In some cases, the seller may be responsible for paying transfer taxes or other local government fees related to the transfer of ownership.
- Any outstanding liens or judgments: Sellers are generally expected to settle any outstanding debts, liens, or judgments against the property before closing.
What Are Seller Subsidies?
Seller subsidies, also known as seller concessions or seller contributions, refer to an arrangement in a real estate transaction where the seller agrees to pay a portion of the buyer’s closing costs or other expenses associated with the purchase. Essentially, the seller offers financial assistance to the buyer to help offset some of the upfront costs of buying a property.
It’s important to note that seller subsidies are typically negotiated between the buyer and seller as part of the overall purchase agreement. The terms and amount of the subsidy are subject to mutual agreement and can vary depending on the specifics of the transaction, market conditions, and the motivation of the parties involved.
Seller subsidies can be beneficial to buyers, as they help reduce the upfront costs associated with purchasing a property. However, it’s important for buyers to carefully consider the overall purchase price and the long-term financial implications, as the seller subsidy may be factored into the negotiated price of the property.
It’s advisable for both buyers and sellers to consult with a real estate agent or attorney who can provide guidance on the negotiation and documentation of seller subsidies to ensure that all parties involved are aware of and agree to the terms of the arrangement.
Can You Avoid These Costs?
Yes! By working with a direct buyer who will pick up all costs associated with the closing! A direct buyer will not charge you a commission, as they are not an agent. Many times, direct buyers will offer to pick up all costs, which will save you money and hassle at the closing table.
Are Repairs Included?
This is another one that is negotiated between the buyer and the seller. If the home is in need of some obvious repairs, the seller will often take care of these before putting their home on the market. However, if an inspection shows additional repairs are needed, a buyer may make his offer contingent on repairs being made. A buyer and seller can work this out before going to closing.