Who Pays Closing Costs When Selling Your Rural, Vacant Land?

Who Pays Closing Costs When Selling Your Rural, Vacant Land?
Hi, I’m Beth with TB Properties Buys Land, and today I’m going to discuss who pays the closing costs when you’re selling your rural vacant land. Now, if you’re selling property, whether it’s a home or rural vacant land, there’s going to be closing fees and you need to be aware of what those fees consist of so that you know what dollar value you’re going to take home once you sell your property. Whether you’re selling a home or selling rural vacant land, most of your closing fees are going to be similar if you’re closing through a title company. If you’re closing through a title company, there’s going to be escrow fees and they typically split those and they call it buyer and seller escrow fees, but they exist, and they cover the title company, all the paperwork and what they do to close the sale.

There may possibly be attorney fees, especially if there’s a chain of title issue, if they’re putting together an abstract, there may be attorney fees, but not always. Title insurance: that’s another fee. Transfer taxes or excise taxes: that’s another fee. Property taxes tend to be prorated. There’s recording fees that you pay the county to record a copy of that deed at the county level. If there’s any liens or mortgages against the property, those need to be paid up at the time of a sale. And then there’s the realtor fees. So if you’re selling a house, typically the realtor fees are about 6% split between buyer and seller, 3% and 3%. Now for rural vacant land, the dollar value of that transaction’s a lot lower and typically the realtors will charge 10%. That’s split between buyer and seller, five and five.

So most of the time when it comes to closing costs, those closing costs are split between the buyer and the seller, and standard is that the buyer will pay for the buyer’s escrow fees. Buyer also pays for the recording fees that take place going to the county to the record that deed with the county. And they also pay their side of the realtor fees, that 5%. The seller will typically pay the seller’s escrow fees. The seller also pays, which would be you, would pay for the title insurance, the excise or the transfer taxes, of course the property taxes that are prorated, and the realtor fees, which would be 5% if a realtor is representing you.

That is a typical split. Now you as the seller have leverage, you can negotiate how that works and who’s going to pay what; that’s up to you. So if you are selling your property on your own, what you want to do is you’re going to want to contact the local title company that takes care of real estate transactions in your county, and you can call them up and ask, “Hey, this is my property. This is the dollar value that I’m going to sell it for. Will you please give me an estimate of what the escrow fees are going to be? What are the excise taxes? What are those going to look like? How about the recording fees?” And you can get an estimate of all of that. And then you can negotiate who is going to pay what.

But the last thing that you want to do is to sell that property and then receive that HUD statement. Or worse yet, the check from the title company and find out that whatever you thought you were going to receive, maybe you need that money, but whatever you’re going to receive is going to be less than your expected amount. Maybe a couple thousand dollars less or whatever it is. So do your due diligence ahead of time. Find out what those costs are going to be, and before you sign an agreement, make sure that you negotiate who’s paying what and you know, at the end of the day, what you’re going to bring home. Okay?

So if you’re looking at a purchase agreement and it’s not clear who was paying for what when it comes to closing costs, make sure that you are clear. Make sure that it’s spelled out, get a new agreement, make sure everything is understood, but don’t take it at somebody’s word who’s paying what for closing costs. Does that make sense? When it comes to closing costs, as you can see, there are several different closing costs and they can add up depending on the size and the dollar value of your property.

When it comes to TB Properties Buys Land, we’re real estate investors. We have a single page purchase agreement and we very easily spell out who’s paying for what. What the agreement states is that the seller, which is you, will cover any mortgages or liens against the property. We think that’s fair. If you’ve got a lien against the property, you should be responsible for that. But TB Properties Buys Land, as the buyer, will pay for the buyer and the seller escrow fees at the title company. TB Properties Buys Land will pay for the excise taxes, the recording fees, if there’s any attorney fees involved, the property taxes… all of that.

So we spell that out individually and explicitly in our single page purchase agreement what we’re going to cover, so that you know that the dollar value that is listed on that purchase agreement is exactly what you’re going to come home with, unless you have a mortgage against your land. Okay? We think that it is really important that you understand very clearly what dollar value you’re going to come home with at the end of that transaction when it closes.

But if you have any questions about closing costs or closing fees and how that works or how TB Properties Buys Land works, please feel free to reach out to us. You can call us at 214-699-4455, you can email us, reach out across our website. We’re happy to answer any questions that you might have and walk you through your individual transaction. Thanks again for listening. I hope I answered some questions for you, and until next time, take care.
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