Florida Homebuyers: What You Need to Know About Closing Costs Before You Buy

Breaking Down Closing Costs: What Buyers in Southeast Florida Need to Know

Buying a home in Southeast Florida is an exciting journey, but the financial side—especially closing costs—can catch some buyers off guard. Understanding all possible and hidden fees ensures that you’re fully prepared when it’s time to sign the dotted line.

What Are Closing Costs?

Closing costs are the expenses and fees paid at the final stage of the home-buying process—usually ranging from 2% to 5% of the home’s purchase price. While buyers focus on securing a mortgage, it’s crucial to budget for these additional costs to avoid surprises.

Standard Closing Costs for Buyers

1. Loan-Related Fees

• Loan Origination Fee: Lenders charge this fee (typically 0.5%–1% of the loan amount) for processing and underwriting the mortgage.
• Discount Points: Buyers can pay points upfront to lower their interest rate over time.
• Application Fee: Some lenders charge an application fee to cover administrative costs.

2. Property-Related Fees

• Appraisal Fee: Before approving a loan, lenders require an appraisal, usually costing $300–$600.
• Home Inspection Fee: While not mandatory, inspections are essential and can cost $300–$500.
• Survey Fee: In Southeast Florida, certain properties may require a land survey, ranging from $350–$700.

3. Title and Legal Fees

• Title Search and Title Insurance: Protecting against ownership disputes, title search fees range from $200–$400, while title insurance can cost around 0.5% of the home’s price.
• Attorney Fees: While Florida doesn’t mandate attorneys for closings, hiring one for review may cost between $500–$2,000.
• Recording Fees: Florida counties charge a fee (usually around $50–$100) to officially record the deed and mortgage documents.

4. Prepaid Expenses

• Homeowners Insurance: Southeast Florida homes often require comprehensive insurance, paid upfront for the first year ($1,000–$3,000).
• Property Taxes: Buyers often need to prepay property taxes, which vary based on location and home value.
• Escrow Fees: Lenders may require several months’ worth of taxes and insurance payments held in escrow.

5. Buyer’s Agent Commission

As of July 2024, Florida requires buyers to sign a Buyer Broker Agreement before working with a real estate agent. This contract outlines the agent’s responsibilities and how their commission will be paid. Buyers can negotiate this fee with their agent, and in some cases, request that the seller covers it as part of the purchase contract.

How Buyer’s Agent Commissions Work Now

Traditionally, the seller covered the commission for both their agent and the buyer’s agent. However, under the new rules:

• Buyers must negotiate and agree on their agent’s commission upfront.
• The commission may be paid directly by the buyer or negotiated as part of the purchase offer.
• Sellers are no longer required to offer compensation to the buyer’s agent through MLS listings.

Hidden or Unexpected Fees Buyers Should Know

While the costs above are standard, buyers should also prepare for hidden fees that can add up quickly.

• HOA Transfer Fee: If the home is in a community with a homeowners association, expect transfer fees between $200–$500.
• Pest Inspection: In Florida’s humid climate, termite inspections are often required (~$100–$300).
• Flood Zone Determination Fee: Southeast Florida homes may fall within flood-prone areas, requiring an additional assessment fee (~$50–$150).
• Wire Transfer Fees: Sending funds for closing may incur bank fees (~$25–$50 per transaction).
• Courier Fees: If physical document transfers are needed, courier services might charge $30–$100.

How Buyers Can Reduce Closing Costs

• Negotiate with the Seller: In a buyer’s market, sellers may agree to cover certain fees.
• Shop for Lenders: Different lenders have varying origination and application fees.
• Check for First-Time Buyer Assistance: Florida offers programs that help cover closing costs for eligible buyers.

Understanding and preparing for closing costs is essential to avoid surprises and ensure a smooth homebuying experience in SE Florida. When you know what to expect, you can budget more effectively and move into your new home with confidence.

If you’re planning to buy a home in SE Florida and want expert guidance every step of the way, I’m here to help you navigate the process from start to finish—transparently and stress-free.

CONTACT ANNETTE

Let’s start working together!

Annette Dammeyer, REALTOR^®, ABR^®, AHWD^®

Coldwell Banker Realty

901 E Las Olas Blvd STE 101, Fort Lauderdale, FL 33301

808.747.3686

Annette.Dammeyer@cbrealty.com

www.AnnetteDammeyer.com

SL 3535792