You’ve likely heard about closing costs when you either buy OR sell a house, but do you know everything that they include? It’s not just the realtor fees. Check out our closing cost “FAQ” to learn more about what closing costs are all about.
What Are Closing Costs Exactly in Hawaii?
Closing costs refer to all of the fees that must be paid at the actual closing of your sale, whether you’re the buyer or seller. 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 (usually paid by the buyer)
- Origination fees
- Recording fees
- Title insurance (both buyer and seller pay)
- 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 such as termite inspection fees
- REALTOR COMMISSIONS!
Who’s Paying?
While the buyer will usually pick up a number of these, it is important to note that the seller typically pays 100% of the realtor commissions. This will be about 6% of the final sale price – that’s a hefty sum in some markets. Other than your possible mortgage balance, this is by far the biggest cost when it comes to your closing costs. Negotiating the other costs during the sale process is becoming more and more popular. In an effort to attract more buyers, sellers are more frequently willing to pay some or even all of the closing costs.
As a seller, you will also need to pay your share of the year’s property taxes up until the day of closing. Any HOA fees or other community association or maintenance fee costs should be prorated and paid at this time as well. Your closing attorney or title/escrow officer will help you confirm the list of each item and due amount for both buyer and seller.
What Are Seller Subsidies?
Have you heard of a subsidy at closing? This is an amount negotiated between the buyer and seller. It is the percentage the seller agrees to pay towards the closing costs. For example, you can offer to put $3,000 towards closing to help alleviate some of the closing costs for your buyer. Overall, paying these subsidies are often a small price to pay to bring buyers to the table! Remember — buyers have options and you want to make them choose your home over another one available in your market.
Can You Avoid These Costs?
Of course! By working with a direct buyer – like us – who will cover all of your closing costs! 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. This can easily be another $5,000 or more in your pocket at the end of the day. Remember – realtor commissions are just one part of your total closing costs. Having an actual buyer, instead of an agent, can help chip away at the otherwise costs of selling your house.
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.
However, if you’re selling your Hawaii house to a professional company that buys houses, like us at Oahu Home Buyers, then you don’t have to fix up anything. We always buy properties “As Is”, sparing you that cost and headache.