From Tampa Bay down to Port Charlotte and beyond, the FAR/BAR residential contract is by far the most commonly used contract in our local market, and has been for many years. When using the FAR/BAR contract, “who pays for that?” is still one of the most common questions agents are asked; especially by buyers and sellers relocating to the Gulf Coast of Florida who are surprised to find that closing customs here may be a little different. Let’s clear it up.
Typical Buyer Costs
Buyers in our market tend to carry a solid share of closing costs. Under the FAR/BAR contract, here’s what they typically are responsible for:
- Owner’s title insurance policy: This is the big one that surprises some transplants. In Manatee, Sarasota, and Charlotte counties in particular, it is customary for the buyer to pay for the owner’s title policy and related fees (permit search/title search fees). The opposite can be said for much of the rest of Florida and in fact the rest of the country. Setting this expectation early is important to avoid surprises.
- Lender/loan origination fees: Points, underwriting, and application fees charged by the lender.
- Lender’s title insurance policy: Required by most lenders. This is separate from the owner’s policy.
- Home inspection fees: Wind mitigation, 4-point inspections, termite inspection, pest inspections, etc. are often added in addition to your typical home inspection.
- Appraisal fee: Ordered by the lender, paid by the buyer.
- Prepaid items & escrow setup: Homeowner’s insurance (a major line item in coastal Florida), prepaid interest, and initial escrow deposits for taxes and insurance.
- Recording fees for the deed & mortgage: Paid to the county clerk to record the ownership transfer. This includes Documentary stamps taxes on a recorded mortgage ($0.35 per $100) and intangible taxes ($.20 per $100), in addition to fees to record the documents.
- Survey (if required): Costs can vary widely depending on lot size and other factors.
- Closing Services: The party who is choosing the Closing Agent will also typically pays the fees the Closing Agent charges for services.
Typical Seller Costs
Sellers on the Gulf Coast also can carry meaningful costs at closing. Prepare them early with what to expect so there are no surprises at closing.
- Real estate commissions: Traditionally a seller cost, though much has changed after the NAR settlement which made headlines over the last few years. Flexibility regarding who pays commissions is increasingly part of the conversation in our market.
- Documentary stamp tax on the deed: Florida charges $0.70 per $100 of the sale price statewide (Miami-Dade county is $.60 per $100). This tax is typically the largest cost a Seller pays besides commissions. On a $400,000 home, that’s $2,800!
- Mortgage payoff & related fees: Existing mortgage(s) balance, plus any payoff processing or wire fees.
- HOA/CDD estoppel fees: With the volume of associations and CDDs throughout our area, this one comes up constantly. The seller pays for the estoppel letter(s), which can be a maximum of $299 per letter.
- Prorated property taxes & HOA dues: Adjusted at closing based on the closing date. In Florida, taxes are paid in arrears, so sellers typically credit the buyer for the portion of the year they owned the home.
The FAR/BAR contract sets the framework, but local custom can often determine who is paying for what. However, it is important to note that all of these fees discussed herein are entirely negotiable. If you have any questions regarding closing costs, please do not hesitate to reach out to your trusted local real estate attorney!
