Category: Residential Real Estate

South Florida Closing Costs: What Buyers & Sellers Should Expect

Introduction

Closing costs are critical to any real estate transaction, impacting both buyers and sellers. These costs can vary in South Florida, particularly in Palm Beach County, due to local regulations, taxes, and legal requirements. Understanding these expenses upfront can help homebuyers and sellers budget appropriately and avoid surprises at the closing table.

Whether you’re a first-time homebuyer, a seller preparing to close, or a real estate investor, knowing what to expect in real estate closing costs can help streamline the process and prevent last-minute financial hurdles. This guide provides a detailed breakdown of what buyers and sellers should anticipate when closing on a home in South Florida, particularly in Palm Beach County.

For additional insight into residential real estate transactions, check out our guide: Simplifying Residential Real Estate Transactions: A Guide.

What Are Closing Costs?

Closing costs refer to the fees and expenses required to finalize a real estate transaction. These costs typically include lender closing costs, real estate attorney fees, title and escrow fees, mortgage origination fees, and property transfer taxes. While some expenses are the buyer’s responsibility, others fall on the seller.

Closing costs generally range between 1.5% to 5% of the home’s purchase price. For example, a home purchased for $400,000 in Palm Beach County could come with closing costs ranging from $6,000 to $20,000. Knowing this beforehand allows buyers and sellers to better prepare for these expenses and avoid unexpected financial strain.

Breakdown of Closing Costs for Buyers in South Florida

Homebuyers in South Florida should expect to pay a variety of home closing fees, including:

Loan Origination Fees

Lenders charge a mortgage origination fee, typically around 0.5% to 1% of the total loan amount. This fee covers processing the home loan underwriting fees and assessing the borrower’s financial qualifications.

Title Search & Title Insurance

Before closing, a title search is conducted to ensure the property has no existing liens or claims that could impact ownership. Title insurance costs vary depending on the home’s value but typically range from $500 to several thousand dollars. This fee protects both the buyer and lender from future title disputes.

Attorney Fees

Hiring a residential real estate lawyer like Derek M. Jorgensen or Justin J. Shepard from Scott, Harris, Bryan, Barra & Jorgensen, P.A., ensures a smooth transaction. Attorneys assist with real estate contract review, title examination, and property settlement charges. Their knowledge gives buyers peace of mind, especially in complex real estate transactions.

Learn more about Derek M. Jorgensen here and Justin J. Shepard here.

Home Inspection & Appraisal Fees

Most lenders require a home appraisal to determine the property’s fair market value before issuing a mortgage. Additionally, buyers should invest in a home inspection to uncover potential issues with the property. These fees typically range from $300 to $600 each.

Prepaid Property Taxes & Homeowner’s Insurance

Lenders may require buyers to prepay property taxes and homeowner’s insurance at closing. Depending on the home’s value and location, these costs vary but can amount to several thousand dollars upfront.

Recording Fees & Documentary Stamp Tax

The recording fees for real estate transactions cover registering the deed and mortgage with the county. Florida also imposes a documentary stamp tax on real estate transactions, costing $0.70 per $100 of the sale price. For a home sold at $500,000, this amounts to $3,500.

Breakdown of Closing Costs for Sellers in South Florida

Sellers are also responsible for specific home closing fees, including:

Real Estate Commission Fees

One of the sellers’ highest expenses is the real estate commission fee, which typically ranges between 5% and 6% of the sale price. This fee is split between the buyer’s and seller’s agents.

Title Insurance

In Florida, sellers often cover the cost of the buyer’s title insurance policy.

Seller’s Attorney Fees

Many sellers hire real estate attorneys like Derek M. Jorgensen or Justin J. Shepard to oversee the transaction, draft documents, and handle any legal issues that may arise.

Potential Issues That May Arise During Closing

Even well-prepared transactions can face obstacles. Here are some common issues and how Scott, Harris, Bryan, Barra & Jorgensen, P.A. can help:

Title Defects: Undiscovered liens or ownership disputes can delay closing. Our attorneys ensure a clear title before finalizing the transaction.
Financing Delays: Lender complications may push back the closing date. Our legal team works closely with lenders to resolve issues efficiently.
Contract Contingency Disputes: Disagreements over repairs or inspection findings can stall the deal. If a buyer or seller receives an unfavorable inspection report, our legal team provides guidance, for example, price reduction, repair credit, repairs, or do nothing. Our attorneys explain the benefits or drawbacks of each option to keep the transaction on track.
Closing Document Errors: Mistakes in contracts or financial statements can be costly. Our attorneys meticulously review all documents to prevent last-minute surprises.

Conclusion & Call to Action

Understanding home closing fees in South Florida can help buyers and sellers budget effectively. If you need assistance with your Palm Beach County real estate closings, contact attorneys Derek M. Jorgensen and Justin J. Shepard at Scott, Harris, Bryan, Barra & Jorgensen, P.A., today for expert legal guidance.