Probably the best way of looking at your Closing Costs for the sale of your House/Home is that they will be divided into four (4) different categories. The primary four (4) categories are:
Brokerage Commissions may vary depending on the particular geographical region that you are located and based upon the particular market condition that you are in. For instance, if you are in what is commonly known as a “Seller’s Market Place,” the Brokerage Commission may be a bit less, depending upon the aggressiveness of various Brokers. As a general rule, a Brokerage Commission is 6% of the Purchase Price. When getting ready to sell a property you should count on the Brokerage Commission being 6% of the Purchase Price. From experience, Brokers that are very well versed in the particular area of selling House/Home, especially those that are well known in the industry generally do not budge from the 6% position of their entitlement to a Brokerage Commission.
Most people agree that having a Broker involved with the particular transaction is a very highly positive maneuver. The Broker may assist in negotiating prices and maximize the potential that a Seller will receive. Regardless, there are many Sellers that proceed with what is commonly known as “SBO” and/or a “FSBO” transaction, which is “For Sale By Owner”. This is dealt with in another section of this website entitled FSBO. It speaks for itself, that a true “For Sale By Owner Transaction”, you do not generally pay a Brokerage Commission. However, this is not always the case.
There are a lot of instances in which although you are selling and announcing that the transaction is “For Sale By Owner”, it may be that the Purchaser that actually visits the Unit is accompanied by a Broker. In such situations the Broker, is entitled to a Brokerage Commission. Sometimes there may be negotiations with that particular Broker so the 6% commission is not 6% but be a lower commission structure. However, under all circumstances, it is imperative to have in writing your Brokerage Commission Agreement. One should never be in a situation where the Brokerage Commission is a debatable proposition. As such, under all circumstances, there must and should be written Brokerage Agreement.
Adjustments technically are not fees at all. They are exactly what they are stated to be “adjustments”. Adjustments are made to the following: (i) real estate taxes; (ii) fuel; (iii) water; and (iv) assessments
(i)Real Estate Taxes:
A Seller should be entitled to get paid back for any time that they have prepaid any real estate taxes for that particular quarter, half or year that they do not own the Property. For instance, if you close on February 2 of any particular calendar year and have already paid quarterly or annual tax bill until the end of the particular year, then you should be entitled to a credit/adjustment from the Purchaser commencing from February 2 through the end of December. This is assuming that you have paid until the end of the year. If you are selling in New York City a title company will be readily able to make a determination as to whether payment has been made. Although, if payment has just been made by you immediately prior to the Closing and the New York City Department of Finance has yet to pick up the payment then it becomes imperative that in order to do an appropriate adjustment of Real Estate Taxes that you keep very accurate record of all Real Estate Tax payments. This means, that you need to demonstrate that you are entitled to the adjustment in question. You may do this by having a check marked paid.
A Seller may ask its supplier of fuel to provide what is commonly known as a “dip stick test” to see what available on-site oil is still in the tank. Obviously, if your home uses gas this will differ by simply having a gas bill handy. Generally the Parties agree that the last gas bill should be indicative of the use in question. However, if you have oil/fuel and your company has provided you a reading of the amount of the fuel by doing a “dip stick test” i.e. going to the property and placing on a stick to obtain the level your fuel oil tank. The supplier of the fuel will be able to provide you a written receipt indicating the amount of the fuel still stored in the tank and then providing you with the current cost of fuel at the time of the Closing. A Seller is entitled to be reimbursed for the amount of fuel left in the oil tank of the Property.
If you run on what is commonly known as “frontage” then it should be an easy determination as to what has been paid as of the date of Closing. A Seller who is already prepaid its “frontage” shall be entitled to an adjustment for the amount that it has already paid for at the period of time that it is no longer the Owner. For those that are actually using water on a meter, it is imperative that the Owner of the property/Seller order a water meter reading. The water meter reading should be requested at least 30 to 45 days prior to the Closing. This is so the water company has a sufficient amount of time to conduct the reading.
As can be seen, Closing Costs are unique and need to be carefully analyzed. Only through the assistance and expertise of Kishner Miller Himes may one fully understand the ramifications and obtain a true total of Closing Costs.