Last Update: 4/17/18
Buying any home or condo in Florida, or any piece of residential real estate, means that the buyer and the seller must go through the “closing process,” which may be the only time, or one of the few times, that they have to go to a real estate closing. However, for the real estate agents involved in the deal, along with the title agents as well as any real estate lawyers hired by either buyer or seller, closing on real estate is a familiar transaction, filled with all sorts of tasks and to-do lists (some of these tasks require spending money, like for inspections, title searches, survey and lien search, etc. ) before the sale of the property is completed.
Both buyers and sellers have a lot of work to do to close a real estate transaction, with some tasks requiring expenses to be incurred. For those buyers and sellers who don’t educate themselves on the details of a real estate closing, particularly on the customary costs associated with a closing in Florida, they may be vulnerable to paying more than they need to for these tasks.
Educating yourself is a good thing because it is possible to negotiate the cost for certain services and even avoid paying others. (It is also possible to negotiate, prior to entering into a contact, for which party (either buyer or seller) who is responsible to perform and pay for certain closing costs.)
Residential Real Estate Closings
In Florida, like other parts of the country, when a buyer and seller of real estate are ready to finalize the sale of a property, the process of completing that purchase is called the Closing of the Transaction, or simply “the closing.” Tasks like a title search which is done to make sure clear title passes to the buyer, and inspections of the property for termites, are part of the closing process.
For more information on the closing process, read our prior post on Florida Real Estate Closings.
What Are The Usual Closing Costs for a Florida Residential Real Estate Closing?
There are customary costs and fees when selling a home or condo in Miami-Dade, Palm Beach, and Broward Counties. These are costs that the seller and buyer and their real estate agent can expect as part of any deal.
For instance, a buyer of residential real estate in our part of the country should probably expect to pay costs at closing that include:
- The costs charged by your lender as part of providing a home loan mortgage to you for the purchase (for example, credit report fee, loan origination fee, flood certification fee, etc.);
- The fee for conducting the closing and issuing a title insurance policy;
- The cost to perform a lien search or order a Survey of the property;
- The fee to record the mortgage down at the county real estate property records.
Negotiating Residential Closing Costs
1. Buyers/Borrowers and Lenders
First of all, buyers should be ready to discuss what their lenders are charging in closing fees. There are usually several items that can be negotiated between the bank and the buyer, including things like:
- Broker fees;
- Loan processing fees;
- Locking mortgage interest rate fee;
- Loan application fee.
From a Florida real estate lawyer’s perspective, if there is any fee or cost involved in closing that seems suspicious, curious, or high, then it’s smart to ask about it. Negotiation is a part of real estate transaction, and there are usually ways to negotiate for a lower closing cost – or even get that fee removed from having to be paid at all.
This includes deciding which lender to use in getting the home loan. There are some banks out there who offer flat-rate closing cost fees. They market flat-rate closings as making things easier for everyone who is going through closing, it’s less paperwork.
Sometimes, that flat-rate may be a good deal. In other situations, it may be hiding excessive closing costs for the buyer to pay. (lending institutions are required to disclose all costs and expenses associated with a residential real estate loan – for questions here, see Real Estate Settlement Procedures Act and the Consumer Financial Protection Bureau)
A Florida real estate lawyer can help by reviewing the paperwork provided by the lender to make sure the buyer/borrower is receiving all of the information needed to make a fully informed decision in order to get the best deal on a mortgage (on interest rates as well as on closing costs). Your lawyer can help you compare offers (by reviewing the Good Faith Estimates) from a handful of mortgage lenders, where the lenders disclose to you what they will charge in closing costs if you were to get your home loan from them. (In our part of the state, buyers typically pay between 3-5.5% of the sales price in total closing costs, which includes escrows and prepaid items i.e. taxes and insurance.)
2. Buyers and Sellers
All closing costs can be negotiated between buyers and sellers. There is no Florida law that demands one party or the other pay the closing costs in a residential real estate purchase. Depending on the market conditions, one party may be willing to pay all or some of the closing costs in order to sweeten a deal or to get a deal completed.
The Closing Disclosure Form Before Closing
The Consumer Financial Protection Bureau (CFPB) requires that a completed federal document called the “Closing Disclosure” be provided to the buyer/borrower within 3 days of the closing date (the time when the transaction is scheduled for the final documents to be signed and the deal to be completed).
This document provides all of the details for every single closing cost that is being charged and paid by the borrower at the closing. It’s important to review the Closing Disclosure carefully, to double-check that what you’ve been told (see the Loan Estimate form – the document you received after applying for the loan which included your estimated interest rate, monthly payment, and total closing costs for the loan, among other important information) you will have to pay in fees and costs is exactly what you will be paying at closing.
If you negotiated not to pay the lender certain fees, for instance, then you need to check to make sure that the Closing Disclosure does not show those fees in its list. Additionally, you need to make sure that there aren’t any surprise fees and costs on the Closing Disclosure that you aren’t expecting to pay at the closing table.
Florida Real Estate Lawyer and Closing Costs
Having an experienced Florida real estate lawyer help in the purchase or sale of Florida residential real estate is not as expensive as some may assume — and having an attorney to help deal with bankers and brokers on things like reviewing home loan terms and closing costs can sometimes result in savings for those involved.
If you are curious about how a Florida real estate attorney might be able to help to buy or sell a home or condo in Florida, then call and ask what they can do for you and what they might charge you for their services — it’s free to ask!
A good piece of advice when you and your family are purchasing or selling your family home in one of the biggest transactions of your life is to at least talk with a Florida real estate lawyer. Getting someone to review all of the paperwork isn’t as costly as most of us think it is. And, it’s always a lot cheaper than paying to fix a problem after a closing occurs. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.
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