Saturday, October 28, 2017

I have to pay for WHAT? : Understanding your settlement charges

Let's look at those items that the seller usually pays:
  • Broker commission
    • The broker's commission could be a percentage of the selling price, a flat fee, or some other arrangement. In most cases, it is a percentage of the sale price. The commission is paid at the closing, usually by the seller. 
  • Attorney fees (Less common in Mid-MO)
    • The fee depends on how much work the attorney actually does. It is not common to use an attorney in addition to a realtor in our market but some sellers or buyers like to have an attorney look over the paperwork if they have questions about the contract. 
  • Recording documents to clear the title
    • Sometimes a seller may have to file a satisfaction of mortgage document or a document showing satisfaction of other judgments. If so, the seller's attorney will file the documents, which will be recorded in the county clerk's office. 
  • Satisfaction of existing liens
    • The title to a property cannot be transferred until any existing liens have been paid off. There is a fee associated with satisfying the liens which is calculated based on the amount of the lien. 
  • Special fees, such as coop or condo fees 
    • Some cooperatives have what is called a flip tax that is paid by the seller when the property transfers. Condominiums have special maintenance fees due to the homeowner's association. These fees are called assessments. If the seller owes of these fees, he or she will pay them at closing. If the seller has prepaid these fees, an adjustment will be made at closing.

These lists give you an idea of the items that are typically debited or credited to the seller. 
Seller's Debits
  • Broker's commission
  • Delinquent taxes
  • Document preparation fees
  • Loan balance
  • Pest inspection (typically only on VA loans)
  • Soil test (rare)
  • Survey (rare)
  • Termite treatment (typically only if agreed to on the inspection notice)
  • Unpaid utility bills 
Seller's Credits
  • Contract sales price
  • Items paid for in advance, such as insurance premiums 

3509 Sierra Madre COLUMBIA, MO 65203

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