Northern Virginia
Closing Cost for Sellers:
Introduction

Did you know that the most significant chunk of money a homeowner pays at a real estate closing is the loan payoff? Whether it’s your 1^sttime selling a home or you don’t recall what happened during your last home sale, this page is for you.

What Seller Paid closing cost do homeowner incur when selling a property and how much can I expect to pay when selling my home?

Here are the sections in this article that will answer both of those questions:

• Your Home Value
• Northern Virginia Closing Cost for Sellers
• Northern Virginia Closing Cost: Math Breakdown
• Expected Northern Virginia Closing Costs
• Net Proceeds Calculator
• FAQ: Home Seller Questions
• How Can We Help?

After reading this article, you won’t be shocked at the closing table.

Let’s start by figuring out your home’s value.

Your Home Value

It’s essential to look at selling a home differently than buying a home. Most home buyers start their process with a quick visit to the bank to assess how much home they can afford.

You’ll start your home selling process by confirming your home’s value.

YOUR HOME = BANK

Your home’s value plays a vital role in determining your closing cost because the most substantial expenses to selling a home are based off a percentage of our homes sales price.

Before we go any further, fill out the following form to request your home evaluation report. The home evaluation will give you a comparable market analysis of what you can expect to sell your home in today’s market. Enter your address and email address below to receive your home valuation report.

Real estate commissions are one of the three expense categories that require the value of your home to first before you calculate the expense. Are you wondering how much your home may be worth? Enter your address below to receive your home valuation report by email.

Northern Virginia
Closing Cost for Sellers

Before we discuss the remaining closing costs, let’s introduce the company responsible for completing your real estate closing. If you’re selling your house in Northern Virginia, you’ll be using a licensed company known as a Real Estate Settlement Agent (RESA).  Despite the technical term RESA, you’ll hear people refer to them these type of companies by several names:

• Closing Company
• Title Company
• Settlement Company
• Title Attorney
• Settlement Agent

Regardless of the name, this company has one job and one job only. Make sure you get your money from the buyer

In addition to handling the transfer of funds from the buyer to seller, the RESA also collects money and pays expenses that are related to transferring your house to the buyer. The next section will help you understand the cost associated with the transfer along with a summary of the main charges and expenses you’ll pay when selling your home.

While this is an exhaustive list, your closing can include other items that did not make this list.

Payoffs

Payoff of Mortgages

Since you live in Northern Virginia, you understand that most homes that are purchased in our area use a 30-year mortgage from a lender. With the average person moving every 7 – 10 year, most homes are sold with a balance on their original mortgage.

Your mortgage balance is paid off with the proceeds from the sale at the time of closing. The mortgage balance is the most significant expense.

Payoff of Home Equity Line of Credit

A home equity line of credit, also known as a HELOC, is a line of credit secured by your home. Your home secures this line of credit and usually tied to your equity.

Home equity line of credit will be satisfied or paid off after the home sale process.

Real Estate Commission

Broker & Agent Commissions

Next, to seller contributions, Broker & Agent Commissions represent one of the most substantial expenses to selling your home. Agent commission averages around 5%.

The real estate agents will share the total commission between the agent that represents the buyer (selling agent) and your listing agent. The final commission you pay will depend on whom you hire.

There’s no set commission rate because real estate commissions are negotiable. Real estate is like most service-related industries, paying the cheapest rate means that the agent you’re using to sell your home will have less money to invest in marketing your property.

I don’t recommend using the real estate commission paid as the only method for choosing an agent. My endorsement is to interview three agents from three different companies that service your area.

Please pay attention to the services they offer for the commission that they are charging. The difference in service may lead to a higher sales price and more money in your pocket.

Title Charges | Settlement Charges

Title Charges are total fees you pay to the Real Estate Settlement Agent (RESA) for completing the transfer process. These charges can vary in name and price from company to company and will show up on your Closing Document.

In researching for this article, and, especially this section, I’ve reviewed and consolidated the charges from five of Northern Virginia’s Top Settlement Companies into the following section. Here are the settlement companies used in this section:

1. Universal Title – Kingstowne
2. Monarch Title
3. Highland Title
4. Ekko Title
5. RGS Title

Let’s discuss the fees:

Deed Preparation Fee

This fee is the cost associated with writing the real estate deed to transfer ownership to the current home buyer. 4 of the 5 title companies charged this fee.

Settlement Fee | Closing Fee | Processing Fee

This fee is to complete the closing/settlement by the RESA. It is the highest charge in the Title Section because it includes the Document Preparation fee located below.

Every RESA charge this fee. What I can’t figure out is why does RGS Title charge this fee and a Document Preparation Fee.

Document Preparation

This fee covers the cost of preparing all of the documents associated with the real estate transfer process. Here’s a brief list of some of the documents related to the sale:

• Final Legal Papers
• Mortgage
• Deed of Trust
• Note
• Deed

RGS Title was the only company out of the five companies to charge this fee. They are also the most expensive title service of the five companies.  When you remove the Wire & Disbursement Fee, RGS Title cost $190 more than the other title companies included in this analysis.

Title Release Tracking

This fee is to pay the expense of managing the lien release process. Assuming you took out a loan to purchase your home, your lender placed a lien on the property to protect their interest in the property.

When you sell your home, the lender mentioned above is supposed to be paid from the proceeds of the sale and release the lien from the property. In other words, you and the property free from the lien from the lender.

It’s not uncommon to find that a lender hasn’t released their lien promptly (or ever). Title Release Tracking will ensure that the lien release process is successfully taken care of on your behalf.

3 of the 5 title companies charge an additional fee for this service. Ekko Title includes this fee in their Release Processing Fee, and Highland Title includes this fee in their Disbursement and Release Certification Fee.

Wire Fee | Distribution Fee

This fee pays for the wire transfer from the Real Estate Settlement Agent bank account to your bank account. This fee is optional. The RESA can be directed to provide you with a paper check once the sale has been FULLY processed and recorded.

In Northern Virginia, RESA’s are required to record the deed before disbursing funds. This process can take two business days to complete.

After the deed is successfully recorded in the courthouse, your funds will be disbursed. I recommend that you accept the upcharge for the wire fee to expedite receiving your funds as soon as possible.

Of the five closings used in this article, only 2 of my clients choose to receive their proceeds through a wire transfer. Universal Title Kingstowne had the highest fee for this service.

Electronic Storage and Access Fee | Digital Archive Fee

This is money you pay to gain electronic access to your documents. This fee is not a standard feature offered by all the RESA’s used in this article. Monarch Title is the only company that offered this service for $25.00.

Disbursement and Release Certification

This fee covers two expenses that are previously mentioned. The Wire Fee | Disbursement Fee and Title Release Tracking Fee. Ekko Title is the only RESA charges this fee.

Seller Delivery Fee | Processing Fee

This is money you pay for the courier service that deliveries the deed and lien release to the courthouse or land records. Ekko Title is the only company that charges this fee and based on the prices offered by other RESA’s; they include this charge in their Deed Preparation fee.

Release Processing Fee

Ekko Title is the only company that charges this fee. This fee does the same thing as the Title Release Tracking mentioned earlier in this article. Ekko Title tracks the lien process in house versus using a 3^rdparty vendor.

Despite this fee costing almost twice as much as other RESA’s, Ekko Title total price for Title Charges is 2^ndlowest out of the five companies.

How much will you pay in Title Charges?

Title Companies are also known as Real Estate Settlement Agents have one of the essential jobs in the real estate transaction. You can expect to pay from the mid $600’s to as high as $1,000.

Government Recording | Transfer Charges

The government gets you going and coming when it comes to owning real estate. You pay recording and transfer taxes to purchase a home, and now you have the privilege of paying similar government taxes to sell your home.

There are two taxes you’ll pay to complete the sale of your property. Let’s discuss what they are and how to calculate the tax.

Grantor’s tax | Transfer tax

This is a tax you pay to transfer your property in the Commonwealth of Virginia. The grantor’s tax provides revenue to fund transportation projects across the Commonwealth.

To calculate your expected Grantor’s tax multiple the expected sales price by 0.10%. You will pay $1 per $1,000 per thousand. Your tax will be $500 when selling a house for $500,000.

WMATA Capital Fee

WMATA stands for Washington Metropolitan Area Transit Authority. The state’s website describes the fee as a transportation network that’s vital to the economic growth of Northern Virginia and the Commonwealth.

To calculate your expected WMATA Capital fee multiple the expected sales price by 0.15%. You will pay $1.50 per $1,000 or $750 when selling a home for $500,000.

Congestion Relief

Effective July 1, 2018, the Congestion Relief tax was renamed “WMATA Capital Fee.” You can find out more information on why the name was changed by visitinghttp://virginiageneralassembly.gov website and search for Senate Bill 856 for the 2018 Session.

Deposits, Credits, and Debits

Prepaid taxes, Home Owner Association (HOA) dues, and condo dues will show up as a credit on your settlement statement. You’re only responsible for these expenses while you’re the owner of the property.

For example, assume you pay your HOA every month. You sell your house to a new homeowner who takes possession on the 15^thday of a 30-day month.  You will receive a credit at the closing for the unused portion of the HOA dues because the new owner takes over those responsibilities.

Seller Contribution

This dollar amount will show up as a reduction to your bottom line on your Closing Document because you are contributing money to the buyer from your net proceeds. Seller contribution benefits you because it allows buyers to purchase houses with less cash on hand.

Seller contribution limits are predetermined by the type of loan the buyer uses. Here are some of the seller contribution limits for the more popular loan products:

• Conventional financing – 2% to 9% of the sales price (depends on the intended use of the property and down payment amount).
• FHA – up to 6% of the sales price on owner-occupied homes.
• VA – up to 4% of the sales price on owner-occupied homes.
• VHDA – this isn’t a mortgage instrument and thus do not have down payment restrictions. Whatever the underlining mortgage product being on used on the property will determine the down payment assistance limit.
• USDA – up to 6% of the sales price on owner-occupied homes.

In a buyer markets (when houses take six months or longer to sell) seller’s may offer seller contribution as an incentive to purchase their home over others on the market.

During the home inspection, HOA Inspection or Condo Inspection, deficiencies may be found that require repairs that the buyers request you to remedy. Instead of making the requested repairs, sellers have the option of reducing the sales price or offer a seller contribution.

Unless the buyers are paying cash for your property, it’s more advantageous for them to accept seller contribution.

Miscellaneous Settlement Charges

You’ll want to pay extra attention to this section of your closing fees because these charges are usually at the very bottom of all closing document. The items contained in this section are here because they are infrequent to most real estate transactions.

Due to the small dollar figures and rarity of occurrence, the next section will contain a brief overview of the fees from my research with a highlight or two of the area you want to pay attention or ask questions. Most of the fees fall into two groups, HOA Fee | Condo Fee, and, Fee or Charges Paid at Closing.

HOA Fees | Condo Fees

Selling a home located in an HOA or Condominium means that you agreed to abide by the rules of the development when you purchased your property. You are guaranteed to see a closing fee associated with your home sale because of the additional work on the Association or Development to process your property transfer.

The name of the fees varies between the different associations. The most common fees the association will charge you include the preparation of the association documents. The buyer of your property will review these document during the home sale contract period.

Some associations will also include a charge for an exterior inspection of your property. This inspection will ensure your property is not violating any terms or laws set forth by the association.

Here are just a few of the names used on the Closing Document:

• HOA Transfer Fee
• Discovery Fee
• Move In Fee
• Move Out Fee
• HOA Resale Document Fee
• HOA Resale Disclosure Fee
• HOA Processing Fee
• HOA Resale Package Fee

The fee your association charges for the above services is located in the association package you received when you bought your property. To get the most current fees, we will contact your association before placing your home on the market to get an idea of what’s required to complete the transfer process.

Fees or Charges Paid At Closing

Some services or charges required to sell your home occur after the house is under contract. One of the most common costs you can anticipate paying is the Termite Inspection Fee when the buyer is using a VA loan to purchase your home.

Here’s a list of other Fees or Charges that paid at the closing:

• Termite Inspection –
• Termite Treatment
• Home Warranty
• Contractors
• Real Estate Agent Flat Fee*

*Be careful about the listing agreement you sign at the beginning of the transaction. You may have agreed to pay your agent an additional commission called, “Flat Fee,” without understanding the charge. Agents have been known to charge their client with as little as $395 to as much as $2,500.

READ YOUR LISTING AGREEMENT BEFORE YOU SIGN IT.

Northern Virginia Closing Cost:
Math Breakdown

Now that we know the names and description of the closing costs that is available, let’s walk through an example and break down the math:

Expected Northern Virginia Closing Costs

The following closing cost estimate is based on a Fairfax County, single family home with a sales price of $500,000. This example will make the following assumptions:

• 6% real estate sales commission
• $5,000 seller contribution
• Property is in an HOA that charges $250 for an HOA Resale Package

The following example is only meant to show you what to expect at closing. For a more accurate estimate, please send me an email with your address toAbraham@AskAWalker.com.

Here’s the seller closing cost example: