From the sellers perspective, here are costs associated with most closings.
- 1. Mortgage payoff. If you carry any mortgages, they or other liens against the property will need to be satisfied at the closing table. There are times when a property is considered under water when an owner owes more for the property than the agreed upon selling price for it. The seller may be forced to come to the closing table with their own funds in order to sell unless the sellers lending institution has agreed to forgive some of the debit.
- 2. Commission. Typically, unless it is a private sale, there is a real estate agency involved. Depending on the commission structure between the seller and the agency in the listing contract, this amount is most often based on the final selling price of the property. As an example a 6% commission on a $250,000 agreed upon selling price is $15,000. This amount will be paid to the real estate agency upon closing and is deducted from the sellers proceeds check.
- 3. New Hampshire Transfer Tax. This tax is levied on any real estate transfer of property and is 1.5% of the sales price of the real property. On the NH Department of Revenue Administration website there is a thorough list of what is and what isnt taxable. http://www.nh.gov/revenue/faq/dra_800.htmTypically the tax is split between the seller and the buyer with each party paying 0.75% to the State of New Hampshire at the closing. Using the $250,000 sale price as a guide the total tax is $3,750. Each side of the transaction would then pay $1,875.
- A good strategy for both seller and buyer is to remove from the selling price of the property anything negotiated like furniture and equipment, as it is financially advantageous to both parties to not pay transfer tax on these types of items. Typically appliances (stove, refrigerator, dish washer, washer and dryer), are included in the price of the property. A consideration for the seller is to draw up a bill of sale for the furnishing by putting a dollar value on it. An example would be the furniture negotiated in the final price of $250,000 is $5,000. The bill of sale to be paid at the closing is $5,000 and the final sale price of the property is $245,000. That would save the seller $300 in real estate commission and $37.50 in real estate transfer tax, or a total of $337.50.
- 4. Utilities, Town Tax and Association Fees if any. Costs associated with utilities and town/city taxes which would be pro-rated up until the day of closing and association fees if the property is located in an association.
5. Preparation of the Deed by Attorneys Office or Title Company. This cost can vary depending on the office used but the cost of deed preparation is typically between $100 and $150 here in the Lakes Region. Researching the title is part of the buyers closing package and paid for by the buyer.
6. Registry Mortgage Release fees if any. There is a cost for recording release of the mortgage or mortgages and liens at the registry of deeds, if any exist.