We’re all familiar with the term “closing costs” in real estate transactions, referring to the fees paid by both buyers and sellers at the conclusion of the deal, when contracts are signed, and funds are exchanged. However, the specifics of these costs and who bears responsibility for them can often be unclear. Complicating matters further, the contract frequently outlines the allocation of closing costs between buyers and sellers, a detail negotiated during the transaction process. Thus, let’s delve into understanding the nuances of closing costs when buying or selling a house in Savannah, GA and Chatham County.
Closing Costs When Buying a House in Savannah, GA and Chatham County
When it comes to closing costs, buyers typically face expenses like appraisal fees, mortgage insurance, homeowners insurance, and property taxes. In essence, the closing costs associated with purchasing a house in Savannah, GA and Chatham County can be divided into two broad categories: those linked to buying a home and securing a home loan, and those related to homeownership itself.
Here’s a breakdown . . .
LENDER-RELATED FEES
The fees associated with mortgages can vary from one lender to another, but certain elements remain consistent across the board. For example, while some lenders may necessitate mortgage borrowers to pay for discount points in order to secure the lowest interest rates, others may not impose such a requirement. As a result, borrowers are not only entitled but also strongly encouraged to thoroughly explore different options and compare Loan Estimates provided by various lenders. By doing so, borrowers can effectively assess the terms and costs associated with each mortgage offer, ultimately making a more informed decision that aligns with their financial goals.
THIRD-PARTY FEES
These fees are designated for payment to the various professionals and service providers who played a role in facilitating the transaction and its preparation, including inspectors and attorneys. While each individual fee may appear relatively minor, the aggregate sum can quickly escalate into a substantial amount. It’s important to recognize the cumulative impact of these fees, as they contribute significantly to the overall cost of the transaction. Additionally, understanding the breakdown of these expenses allows buyers and sellers to appreciate the value provided by each service and ensure that they are receiving fair and transparent pricing.
HOMEOWNER FEES
Generally, homeowner fees are among the closing costs and encompass expenses like homeowner’s insurance, property taxes, HOA dues, and similar charges. While these fees are typically assessed annually, they are paid and held in escrow — a temporary bank account — to ensure funds are available when payment is due. Mortgage lenders commonly manage these escrow accounts for borrowers, aiming to mitigate the lending risk associated with disbursing funds.
These fees usually include:
- Homeowners insurance
- HOA dues
- Property taxes
- Escrow account fees
Because the house is collateral for the mortgage loan, some of these have to be paid in part in advance at closing, especially property taxes to avoid government seizure for delinquency.
Closing Costs When Selling a House in Savannah, GA and Chatham County
On the flip side, sellers typically bear responsibility for other closing costs, primarily agent commissions and ownership transfer fees.
AGENT COMMISSIONS
The most substantial closing cost for sellers typically comprises real estate agent commissions, encompassing fees for both the buyer’s and the seller’s agents.
“That’s usually a 6% hit to [the seller’s] bottom line — 3% of the home’s selling price to the agent on either side of the transaction. On a $250,000 home sale, that would amount to $15,000. And it doesn’t help to have just one agent involved in the sales process. A single real estate agent will expect to get the full 6% commission.”
TITLE INSURANCE POLICY
Furthermore, alongside agent commissions, the seller is typically obligated to cover the expense of the lender’s title insurance policy.
Prior to finalizing the sale, a title search is a necessary step. This search aims to authenticate ownership, ensuring that the seller legitimately owns the property without any encumbrances like liens or judgments, and can legally transfer ownership.
“A title policy protects the lender (and the new home buyer if they opt to buy a policy of their own) against unexpected ownership claims that may arise against the property. While not common, an ownership claim can trigger legal disputes – and the fees that come with them.”
RECAP OF Savannah, GA and Chatham County SELLERS’ CLOSING COSTS
Closing costs for sellers, then, typically include all of the following:
- Settling of any outstanding liens or judgments against the property
- Tax for property or deed transfer
- Recording fees
- Agent commissions
- Title insurance
- Needed repairs discovered by the inspections
In addition, there may be other closing costs that buyers and sellers agree to split between them.
Talk to Your Agent About Closing Costs
Undoubtedly, closing costs associated with buying or selling a house in Savannah, GA and Chatham County can represent a significant sum of money. Therefore, it’s crucial for both buyers and sellers to discuss these expenses with their agents well in advance of the closing date. A skilled agent can often negotiate more favorable terms on closing costs, potentially persuading the other party to shoulder a portion of the burden. While some closing costs are fixed, many others are open to negotiation, highlighting the importance of proactive communication and negotiation strategies in managing these expenses effectively. Find out how our agents can help you lower your costs on the closing day. Be sure to send us a message or give us a call at 912-756-2448.
