When it comes to buying or selling a property, the amount of legwork and paperwork that is involved during the whole process can easily overwhelm anyone.
In the midst of this muddle, it’s easy to get so lost in this process of buying or selling a home that you’re prone to overlook closing fees. Closing costs influence not just how much cash you can put towards a down payment, but also how much cash you can give over the appraised price in this chaotic market if necessary.
Although many first-time homebuyers and sellers focus on the down payment and overlook the nitty-gritty of closing expenses, closing fees for your house might approach or even exceed your down payment (particularly if you put less than 20% down). It’s critical to overestimate closing expenses since you’ll have to pay them out of pocket in order to properly close on your house. Many of these costs, unlike your down payment, cannot be rolled into your mortgage (an inspection, for example, is paid for before you buy the home).
Now when it comes to Pennsylvania, both the buyer and the seller are normally responsible for selling costs, with the seller ending up paying more.
As you may have noticed, closing costs in Pennsylvania might be more on average than in other states – something to keep in mind, especially if this is your first time buying or selling a house in Pennsylvania.
If the beginning opened your mind about closing costs in Pennsylvania, then stick around till the end of this article and invest the next 6 minutes that will challenge everything you think you knew about closing costs in Pennsylvania and will answer your questions such as how much are closing costs in pa.
Does A Buyer Or Bear The Closing Cost Or The Seller?
Buyers and sellers share the responsibility of paying for closing expenses at the conclusion of a property sale, but not for the same items. At closing, sellers in Pennsylvania generally pay for title and closing fees, transfer taxes, and recording fees.
How Much Are Closing Costs In Pa That A Seller Has To Incur?
Title Insurance
This is a fee that protects the owner in case the slightest problem arises with previous ownership of a title. This encompasses everything from major and minor loopholes and other gray areas in the documents to full-fledged ownership conflicts. This title insurance fee covers any legal bills or the cost of recouping the value of a house if errors are made.
Owner’s title insurance in Pennsylvania typically costs 0.78 % of the final sale price of your property or $780 for a $100,000 home. However, the exact pricing for your home may differ.
In Pennsylvania, title firms frequently employ tiered pricing to decide how much you’ll pay for insurance based on the value of your house.
In normal circumstances it’s usually the buyer that takes picks up the tab of an owner’s title insurance policy; however, it is not unusual for both parties to discuss who pays this closing expense.
Title and Closing Cost
When you sell your house, you must give the buyer legal possession of the property. Your settlement agent will first do a title search to ensure that no one else has a legal claim to the property.
Title fees amount to about 0.17% and also include the costs of the settlement agent who performs the title search and transfer, as well as other closing-related services.
In Pennsylvania, the buyer and seller normally pay for their own title firm or closing agent, but this is not always the case. To be doubly sure, it’s always best to consult with your realtor.
Transfer tax
The state of Pennsylvania charges roughly 1 % of the sale price of your house when it comes to transferring the title to the new owner. You typically end up paying $1,000 if you sold for the median property value in Pennsylvania, which is $100,000. Your county or city, on the other hand, may levy their own transfer taxes. While these are approximate figures, it’s best to doubly check with your realtor and title business to find out how much tax you’ll have to pay in your particular region.
Brokers’ Commission
In Pennsylvania, the standard commission fee is roughly 6%, which is generally shared between the listing and buyer’s agents. In other words, the listing broker receives 3 % of the commission, while the buyer’s agent receives the remaining 3 %. It is crucial to remember, however, that this charge fluctuates substantially depending on the amount of service, offer, or job performed.
Home Inspection
This fee could cost up to $400 depending upon the location. To check whether the property’s condition is excellent, some lenders need a home inspection to be conducted. Either way, the seller is the one who bears this cost if the HVAC system, indoor plumbing, basement, and other structural components need to be inspected.
Mortgage
Consider this amount to be the most expensive out of all the other expenses when it comes to the closing process. This includes any outstanding balances or prepayment penalties on a property. As a seller, you’re liable to must also pay the recording fee (which is about $150), principal balance, interest accumulated from the last payment until the day of closure, and any penalties imposed by the lender.
HOA
If the property is part of a Homeowners Association, the seller may be subject to additional fees. HOA dues, a document fee at the start of Escrow, and a transfer fee at the end of Escrow are examples.
Property Survey
As a seller, expect this fee to be anywhere from $300 to $950 depending on the size, location, and form of the space, and location. This fee may be asked by the buyer’s lender depending on the property.
Legal Fees
When you’re selling your property in Pennsylvania, the law requires the attendance of an attorney during the closing process. Although the charge is largely dependent on the quantity of labor and the type of house being sold, as a seller, you are prepared to shell out anywhere from $150 to $500 as fees for an attorney when selling a house in Pennsylvania.
Miscellaneous
While most of the expenses have been covered, sometimes other expenses might arise. Before they catch you off guard, these are some of the expenses you might incur as a seller during the closing process:
Inspection for Pest Infestation (anywhere from $50 – $100)
Mortgage Application Processing (anywhere from $700 – $1000 depending on the lender)
Notary Services (about $35).
PA real estate agency fee (about $500)
Flood Certification (anywhere from $8 – $10)
Underwriting (about $225)
Final Document Recording (about $335)
Is There A Way To Save On Closing Costs?
Sure there is!
As a seller, there is light at the end of the tunnel where you have ways and means of saving on closing costs.
These are some of the things you can do to avoid getting completely ripped off.
Cut Corners on Realty Fees
Finding a realtor that charges cheaper listing fees is the greatest method to save money on a significant portion of your selling expenditures.
In Pennsylvania, the average real estate commission is enough to burn a massive hole in your pocket at times more expensive than the rest of your closing fees combined!
Request the Buyer to Chip In
If you’re selling in a seller’s market with little home availability, you might be able to ask the buyer to cover part of your closing expenses.
Since buyer competition is high in current market conditions, they’re usually more prepared to make compromises in order for you to accept their offer on your Pennsylvania house.
Settle For a Better Offer
You may also save money by browsing around for lower prices on items such as title insurance and closing costs. However, these fees are often minimal and uniform from title firm to title company. Calling seven different firms to locate a $50 discount on owner’s title insurance is certainly not worth the headache when you’re already dealing with inspections, repair requests, and assessments!
Now, you may have heard horror stories of people being caught off guard by exorbitant closing fees in Pennsylvania – but this is generally due to a lack of preparation and education ahead of time.
A better option you can consider is selling your house For Sale by Owner (FSBO) from Houzeo in Pennsylvania— they have a mission to arm you with the maximum known knowledge when selling your home. You can check out Houzeo reviews for more information.
When you go the For Sale by Owner route, you’ll have complete control over everything — from listing to advertising to final sales and also save hundreds of dollars in the process!