Florida seller closing costs are lower compared to New York, and will run on average between 7% to 8% of the sale price, assuming a typical 6% Realtor commission and the seller pays for title insurance and related search fees.
In Miami-Dade and Broward counties where the buyer customarily pays for title insurance, but the seller pays for the title and municipal lien searches, Florida seller closing costs can be just a shade over 7% for a typical $1 million property.
Of course, closing costs are even lower for sellers who are able to save on the entire broker commission with a Hauseit® Agent Assisted FSBO listing. By finding a direct buyer, Hauseit® Agent Assisted FSBO sellers may pay only a shade over 1% in closing costs.
We’ll go over all the typical closing costs you might see as a seller on your HUD settlement statement in the article below.
Florida Realtor commission
Florida seller closing costs would be relatively minor if it weren’t for the typical 6% real estate broker commission that sellers typically pay. In a traditional, exclusive right to sell listing agreement, the seller agrees to pay typically 6% of the sale price in commission to the listing broker (i.e. seller’s broker) as long as a “ready, willing and able” buyer is found.
This type of listing contract language is quite dangerous as the seller becomes liable for the commission prior to a closing actually happening. This means that if a contract contingency is breached and the seller has an opportunity to walk away, and does so, he or she might still be pursued for the commission.
What if the buyer has their own agent?
In the case of a represented buyer, a typical Florida listing agreement will specify that the listing broker will co-broke (i.e. split commission) a certain amount to a cooperating broker representing a buyer. Typically, this will be half of the total commission per local MLS association rules.
This means that if the buyer has his or her own agent, then the listing agent will split that typical 6% commission and pay 3% to the buyer’s agent. However, if the listing agent procures a direct buyer, his or her firm will get to keep all 6% in commission.
Florida Documentary Stamp Tax on deed
Florida levies a Documentary Stamp Tax, also known as a transfer tax, on sellers when real property is sold. In all Florida counties except Miami-Dade, the tax rate is 0.7% of the total consideration. In Miami-Dade county, the tax rate is 0.6% on single-family home sales and 1.05% on anything else.
So just what is “consideration?” Is it the same as the sale price? Well, according to Section 201.02(1)(a), Florida Statutes and the Florida Department of Revenue website:
Consideration includes, but is not limited to:
-
money paid or to be paid;
-
the discharge of an obligation;
-
the exchange of property (real or personal); and
-
the mortgage, lien, or other encumbrance on the property, whether assumed or not.
If the property being transferred has a mortgage on it, the balance of the mortgage at the time of transfer is consideration for the transfer. Also, if property is transferred in lieu of foreclosure, the discharged indebtedness is consideration for the transfer.
Pro Tip: The Florida Documentary Stamp Tax is actually levied both on deeds, customarily paid by sellers, as well as on mortgages, typically paid by buyers.
Title insurance
Title insurance is typically paid for by the seller in most Florida counties; however, it is customary in some counties like Miami-Dade, Broward, Sarasota and Collier for the buyer to pay for title insurance.
The cost of title insurance is based on a promulgated rate calculation, meaning it’s set by Florida law:
-
From $0 to $100,000 of liability written 0.575%
-
From $100,000 to $1 million, add 0.500%
-
Over $1 million and up to $5 million, add 0.250%
-
Over $5 million and up to $10 million, add 0.225%
-
Over $10 million, add 0.200%
Title and lien search fees
Who pays for the title search and municipal lien search varies in Florida depending on the county. For example, in Miami-Dade and Broward counties it’s customary for the seller to pay these fees to the Florida closing attorney. The cost will vary by county, but you can expect to pay $100 to $200 each for the municipal lien search and the title search.
Per the standard “AS IS” Residential Contract for Sale and Purchase approved by the Florida Realtors, who pays for title insurance and the related title and lien search fees is negotiable, and one of the following options can be selected:
(i) Seller shall designate Closing Agent and pay for Owner’s Policy and Charges, and Buyer shall pay the premium for Buyer’s lender’s policy and charges for closing services related to the lender’s policy, endorsements and loan closing, which amounts shall be paid by Buyer to Closing Agent or such other provider(s) as Buyer may select; or
(ii) Buyer shall designate Closing Agent and pay for Owner’s Policy and Charges and charges for closing services related to Buyer’s lender’s policy, endorsements and loan closing; or
(iii) Miami-Dade/Broward Regional Provision: Seller shall furnish a copy of a prior owner’s policy of title insurance or other evidence of title and pay fees for: (A) a continuation or update of such title evidence, which is acceptable to Buyer’s title insurance underwriter for reissue of coverage; (B) tax search; and (C) municipal lien search. Buyer shall obtain and pay for post-Closing continuation and premium for Buyer’s owner’s policy, and if applicable, Buyer’s lender’s policy. Seller shall not be obligated to pay more than $__ (if left blank, then $200) for abstract continuation or title search ordered or performed by Closing Agent.
Pro Tip: The title search looks at the chain of title (i.e. the property’s ownership history) to see if there are any defects in the title (i.e. liens, judgments) and that the seller is the true owner of the property. A municipal lien search looks for code violations, water and sewer unpaid balances and open or expired permits.
HoA estoppel letter fees
An estoppel letter from the HoA or condo association is a legally binding document that confirms whether the seller is up-to-date with payments, the amount of any outstanding payments, the amount of any special assessments, the current rate of HoA dues or condo common charges and other pertinent information.
Once the estoppel letter is issued, it is binding and the HoA cannot come back weeks later and claim that there were additional monies owed that they forgot to mention.
HoA and condo associations will typically levy a fee of $200 to 300 for the time and effort required to put together an estoppel letter for a transaction.
Pro Tip: Title insurance companies will typically require any outstanding balances to be completely paid off before issuing a title insurance policy because they do not want the potential for liens or encumbrances on the title.
Prorated property taxes
Property taxes in Florida are paid in arrears, meaning the property tax owed for the current year will only become payable towards the end of the year (i.e. In November Miami-Dade county will release the current year’s property tax bill).
As a result, the seller customarily pays for his or her prorated share of that year’s property taxes, based on how many days he or she has possession of the property. This means a closing in November will result in a much bigger payment than a closing in February for the seller.
As an example, you might see on the closing settlement statement a line item such as “County taxes from 01/01/2021 to 05/01/2021” for say $4,535.45.
Pro Tip: If your current mortgage payment already includes money to be put into escrow for property taxes, then you will get that money back after closing.
Mortgage payoff and prorated interest
If you have an outstanding mortgage on your home, then you’ll need to pay it off in full prior to or on closing day from the sale proceeds. You will also need to pay prorated interest charges for the month. It’s important to request a mortgage payoff statement from your lender and to get that to the Florida closing attorney well in advance so you have exact payoff figures from the bank.
Pro Tip: Check your mortgage payoff statement to see if you have any prepayment penalties. Your original loan terms may impose a penalty on you for paying off your mortgage early, before some pre-determined date.
Miscellaneous other fees
Wire transfer fees – Typically $25 to $50, if any, to reimburse the escrow agent for bank fees.
Document preparation fee – Typically $400 to $600, charged by the Florida closing attorney and different from the settlement or closing fee which is usually paid by the buyer.
Transaction fee – An approximately $300 fee charged to both the buyer and the seller, payable to the real estate broker, for document storage and other transaction related services. Can be disputed by the buyer who will usually be surprised by this charge.
Pest inspection fee – Usually $100 to $200 and only asked for certain types of non-conventional loans and in certain locales.
Pro Tip: If you’re interested in learning more about what closing costs you might expect to pay as a buyer, check out our article on closing costs for buyers in Florida.
