Buying a home, especially in a desirable real estate market like Florida, can have plenty of hurdles. And arguably, one of the most daunting hurdles of them all is Closing Costs. 

It can help both buyers and sellers to look at Closing costs as a bittersweet pill to swallow: on the one hand, it’s a hefty line item when it comes to expenses, but on the other, it’s a reminder that you’re that much closer to buying or selling a home.

Closing costs vary for buyers and sellers in Florida, so the team from Prevu Real Estate breaks down the most important expenses both parties should be aware of, how to estimate them, and even how to potentially offset some of them. 

What are closing costs in Florida?

Closing costs are essentially one-time expenses both buyers and sellers must pay before finalizing a real estate transaction. Of course, these expenses can vary for both parties and can even be negotiated between buyer and seller, depending on the situation. 

The most common closing costs can include real estate commission fees, deed recording fees, transfer taxes, loan origination fees, and other expenses that may come up during the closing process. 

It is vital to talk to your real estate agent, tax advisor, and mortgage broker before diving into the transaction process to understand what closing costs you may have to pay as either seller or buyer.

Who pays real estate closing costs in Florida?

Who pays what often depends on each unique scenario. Sometimes the buyer and seller will share certain closing costs according to prior negotiations, but there are certain closing expenses that are traditionally paid by either buyer or seller independently of each other.

Real estate commissions, for example, are typically the seller’s realm of responsibility. The seller usually pays their listing agent a commission for their services, and a portion of that is often shared with the buyer’s agent. 

On the other hand, loan origination fees are part of a buyer’s closing costs checklist and are usually one of the most significant expenses. 

However, costs like transfer taxes (known in Florida as documentary stamp tax) can sometimes be shared between buyer and seller, depending on negotiations and the nature of the real estate transaction. 

Most common buyer closing costs in Florida

• Appraisal fees

• Loan origination fees

• Title search and title insurance

• Recording fees

• Prepaid property taxes

• Mortgage insurance

• Surveying fees

• Home inspection fees

Loan origination fees often make up the brunt of a buyer’s closing responsibilities in Florida. Title search and title insurance fees can also be significant and ensure the property has no liens.

Recording fees are another typical expense that covers the costs of officially recording the change of property ownership with local government agencies. Buyers should also anticipate prepaid property taxes, which cover the property tax from the closing date to the end of the tax year.

Florida is known for its water bodies and hazardous weather conditions, so surveying fees and home inspection fees may often come into play. Though they don’t make up most of a buyer’s closing costs, inspections are essential to ensuring that the property’s boundaries are correctly mapped out and that the home is free from potential hazards like mold or structural weaknesses.

Most common seller closing costs in Florida 

• Real estate commission 

• Title search and title insurance

• Transfer taxes

• Deed recording fees

• Property taxes up to the date of sale

• Home warranty for the buyer

Real estate commission fees are the lion's share of seller closing costs in Florida. Typically, these fees are split between the buyer's and seller's agents, averaging 5% to 6% of the home’s sale price.

Title search and insurance, as with buyers, ensure there are no unresolved claims to the property. However, for sellers, providing these also boosts the buyer's confidence in the transaction.

Transfer taxes are imposed by the state and local governments, amounting to roughly $2 per $1,000 of the sale value. Remember that additional fees may also be associated with title transfers or applicable homeowner's association dues that need to be considered.

Unpaid property taxes up to the date of the sale are also the seller's responsibility. Sometimes, sellers might also offer a home warranty to incentivize buyers. This warranty typically covers major home systems and appliances for a year after the sale.

How to estimate closing costs in Florida

Estimating closing costs in Florida isn't a mere guesstimate; it demands a blend of research, consultation, and understanding of local nuances.

Both buyers and sellers can start making an estimate by first understanding the home’s potential sale price. Most of the closing costs are percentages of this amount. For instance, if you know the average real estate commission in Florida is about 5% to 6%, on a home sold for $600,000 a seller will pay approximately $30,000 to $36,000 in commission fees.

Tools like online closing cost calculators can also be helpful. Many Florida real estate agencies and lenders provide these tools, which input local tax rates, transaction norms, and fees to provide a ballpark figure.

However, it's not just about plugging numbers into a calculator. Leverage the expertise of your real estate agent and mortgage broker to get as much information as possible so you can start planning an effective budget; their knowledge will help you zero in on a more accurate estimate.

How sellers can minimize closing costs in Florida

There are a few tips sellers can utilize to tackle closing costs more effectively, but let’s start with the most important closing cost: real estate commission fee.

While the typical commission in Florida may range between 5% and 6% of the home’s sale price, it's not set in stone. Sellers can and should negotiate the commission fee with their listing agent, especially if the property is in a high-demand area or you're using an agent who provides limited services. 

Apart from negotiating with your potential listing agent, you should also consider negotiations with your potential buyer. It's not impossible for buyers to agree to cover certain closing costs, especially in a competitive seller's market. 

How buyers can offset closing costs in Florida

The most effective tool buyers can use to save on closing costs is a commission rebate.

Many traditional brokerages do not offer buyers a rebate, yet it is the only tool in a buyer’s potential arsenal that puts cash back in their pocket that can be used towards paying closing costs.

Simply put, a commission rebate is a portion of your buyer’s agent commission given back to buyers as extra savings after closing.

Modern brokerages like Prevu Real Estate invest heavily in a streamlined digital homebuying platform and a hand-picked team of salaried agents to help unlock rebates for buyers and provide them a lane to handle closing costs more effectively. 

For instance, Prevu currently offers the largest rebate in Florida, allowing buyers to receive up to 2% of the home’s sale price via their Smart Buyer Rebate after closing. So if you were to purchase a home in Fort Lauderdale for $1,250,000 via Prevu, you could receive a rebate check for up to $25,000.

Those thousands of dollars in savings can make closing costs more manageable, helping you rebuild your savings or simply jumpstart your furniture budget for your new home.