You may have heard about closing costs when it comes to buying or selling a property, but it’s important to understand what they include. Closing costs are the fees and expenses associated with the transfer of ownership of a property from one party to another. These costs typically include things like appraisal fees, inspection fees, title insurance, attorney fees, and other charges. Our closing cost “FAQ” is a valuable resource for anyone who wants to learn more about the specific components of closing costs and how they can impact a real estate transaction.
What Are Closing Costs Exactly in Chicago, Suburbs of Chicago, North Central and Central Illinois ?
At the time of closing, various expenses need to be paid, collectively known as closing costs. The exact fees and charges that comprise closing costs may vary depending on the location. However, typically, closing costs cover a broad range of expenses, including but not limited to:
- Notary fees
- Transfer Costs
- Transfer Taxes
- Appraisal Costs
- Inspection Fees
- Origination Fees
- Recordings Fees
- Title Insurance
- 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
- COMMISSIONS!
Who’s Paying?
It is noteworthy that although the buyer may select some of these expenses, the seller is usually responsible for paying the entire commission, which can amount to approximately 6% or more of the final sale price. Apart from the possible outstanding balance on your mortgage, this cost is typically the most expensive aspect of the closing process. Nowadays, bargaining for the other expenses involved in the sale has become increasingly prevalent. To attract more buyers, sellers are often bearing the burden of the closing costs. In addition, as the seller, you will be required to pay your portion of the property taxes for the year up until the closing date. Any expenses related to HOA fees or community costs should also be calculated proportionally and paid at this time.
What Are Seller Subsidies?
The negotiated amount between the buyer and seller is known as the percentage that the seller will contribute towards the closing costs. For instance, offering a $3,000 subsidy towards closing costs could assist the buyer in alleviating some of the expenses. In general, providing such subsidies is a minor expense that can attract potential buyers.
Can You Avoid These Costs?
Certainly! You can save money and avoid the hassle of paying for closing costs by collaborating with a direct buyer who assumes all associated expenses. Unlike an agent, a direct buyer does not charge a commission, and they often extend the offer to take care of all costs, further reducing your expenses during the closing process.
Is the cost of repairs covered?
Negotiation between the buyer and the seller is necessary for this matter as well. If there are noticeable repairs required for the home, the seller usually handles them before listing the property for sale. Nonetheless, if a home inspection reveals additional repairs, the buyer may request that the repairs be made before finalizing the purchase. Both parties can come to an agreement on this matter before the closing.