What Closing Costs Does A Seller Have to Pay?

With FHA down payments increasing and no real 100% financing options left, many buyers are requesting  some type of closing cost assistance from the sellers.  I’ve talked before about keeping your eye on the bottom line, and looking at what your net proceeds will be from the sale, not how the money is distributed (but a gentle reminder never hurts!). 

Something that many sellers forget though, is the fact that they will have their own closing costs to pay as well.  Since I get this question almost every time I present an offer, I figure that it’s important enough to include some estimates in the FAQ series. 

 

The numbers below are an estimate, not a guarantee that your costs will be the same.

Settlement/Attorney Fees	$195
Title Research and Certificates	$279
Cancellation/Release of Mortgage	$135
Overnight of Mortgage Payoff	$25
Orleans Parish Transfer Tax	$325
Jefferson/Plaquemines Parish Property Tax Proration	The annual taxes from the beginning of the year to the closing date based on the prior year’s actual tax bill.  For example, if you go to Act of Sale on June 30th, you will owe 6 months of property taxes that will be credited to the buyer for payment of the tax bill when it becomes due at the end of the year.
Orleans Parish Property Tax Proration	Since Orleans Parish property taxes are paid in advance, the tax proration will be CREDITED to the seller from the buyer.

 

Thank you to Carolyn Bailey, closing attorney at Stewart Title for helping with the average costs.

Related Reading

Real Estate Talk for Sellers 

Copyright 2008. West Bank Living. All rights reserved.

What is a Real Estate Absorption Rate?

Frequently Asked Real Estate Questions and Answers from Your New Orleans West Bank Real Estate Specialist

Real estate, like any other industry, has its share of jargon and acronyms that make perfect sense to those in the business, but may not be quite so crystal clear to everyone else.  I was asked this week to explain what an absorption rate is, so I figured I would share it with all of my readers. 

 

From realestatewords.com:

An estimate of the amount of sales or occupancy that can be anticipated over a determined period.

 

Absorption rates are not static numbers.  Instead, they change, sometimes every day, as homes are put on the market for sale and as homes are sold or withdrawn from the market.  The absorption rate at any given time is just an overview or snapshot of the current real estate market.

 

Absorption Rate Examples

In June 2008 there were 9 homes sold in Belle Chasse LA.  At the end of June there were 67 active listings on the market.  Assuming that 9 homes will continue to sell each month, Belle Chasse has a current absorption rate of 7.4 months (67 divided by 9).  This rate will vary depending on how many new listings come on the market and if the current rate of sales is steady. 

If the number of listings increases but the rate of sales does not, then the absorption rate will also increase.  Continuing the last example, if in July 77 homes are now on the market and 9 are still selling each month, the absorption rate increases to 8.6 months (77 divided by 9).

 

Why is an absorption rate important to home sellers?

Changes in the absorption rate indicate shifts in your local real estate market and are an important tool to use when pricing your home.  If absorption rates have been climbing in your neighborhood, it is an indicator that there are not enough buyers for the area and your pricing should be more aggressive.  Just like a sponge, there is a point when the market becomes saturated and can’t support any more listings.  When this happens, homes will linger on the market and take much longer to sell.

 

How do the absorption rates affect you?

There really are no “good” or “bad” rates, because each has a benefit to someone, whether a buyer or a seller. 

• A balanced real estate market has around a 5-6 month absorption rate
• A seller’s market has a less than 5 month absorption rate
• A buyer’s market has a greater than 6 month absorption rate

For a current absorption rate report for your New Orleans West Bank neighborhood, feel free to contact Lisa Heindel.  I’d be happy to prepare a free, up to date analysis of the market trends in your area.