Who Pays Closing Costs on Land Sale in Florida

Are you looking to buy or sell land in Florida and curious as to Who Pays Closing Costs on Land Sale in Florida? Well, this article goes into detail on this and we include an actual settlement statement of an actual closing we had on a lot in Lehigh Acres Florida.

When it comes to purchasing or selling land in Florida, understanding who bears the responsibility for closing costs is essential. Closing costs are the fees and expenses associated with the finalization of a real estate transaction. These costs can vary depending on the specifics of the deal and the location, but it’s crucial to have clarity on who is responsible for them to avoid any surprises during the closing process.

By the way, if you are contemplating selling your Florida land and wondering Who Pays Closing Costs on Land Sale if you sold to us, we do!! You’ll see this in the settlement statement below.

Understanding Closing Costs on Land

Before diving into who pays for closing costs on land sale in Florida, let’s take a closer look at what these costs typically entail:

Title Insurance

Title insurance protects both the buyer and the lender from any issues that may arise with the title of the property. The title company will search the chain of title. If any liens or encumbrances show up, the seller is traditionally responsible for handling this. If nothing comes up in the title search and something arises post-closing, then this is where title insurance comes into play.

As you can see in screen shot below, the title insurance was just one part of what we paid as the title company has other fees that they need to charge as well. On the sale of this $10,000 lot, there was about $512 in title fees including the title insurance.

Appraisal Fees on Land Sale

An appraisal is often required to determine the fair market value of the land. This usually is paid for by the buyer when obtaining financing.

In some cases with a cash sale, a buyer may elect to get an appraisal to ensure they are not overpaying and make the contract contingent upon it appraising at or above the contact price.

Land Sale Survey Costs

Survey fees cover the cost of having a professional surveyor assess and map out the boundaries of the land.

This is important for a buyer to obtain to ensure there are no encroachments from neighboring properties on the subject land. Such as a fence, shed or even a house on someone else’s property.

Attorney Fees When Buying or Selling Vacant Land

Legal representation may be necessary to ensure all paperwork is in order and that the transaction adheres to state and local laws.

In Florida, we use the standard FAR BAR Land Contract that is prepared by the Florida Association of Realtor’s attorneys. This contact allows us to plug in the necessary details. I go into much more detail on this in the article below.

Recording Fees on Vacant Land

These fees cover the cost of recording the transaction with the appropriate government office. These fees will vary from county to county and city to city when figuring out Who Pays Closing Costs on Land Sale in Florida.

Transfer Taxes aka Doc Stamps

The doc stamps in Florida is 70 cents for every $100. So in this example, $10,000 purchase price divided by $100 = 100 x .70 = $70.

This is on all real estate transactions in Florida, regardless of vacant land or a house.

Loan Origination Fees on Vacant Land

If the buyer is financing the purchase with a loan, there may be origination fees associated with the loan. In most cases the buyer will be responsible for these fees, unless the seller provides a credit toward their closing costs. This can benefit a sale if the buyer is putting as little money down.

Real Estate Tax Prorations on Land Sale

This is simply a prorated number at closing. For example, if a seller hasn’t paid their back real estate taxes for the last 2 years and it was roughly $600 per year, the seller would be responsible for those back taxes and prorated up to the day of closing.

Real Estate Commissions on Vacant Land in Florida

Now, this can be a huge cost when figuring out Who Pays Closing Costs on Land Sale in Florida. And real estate commissions are typically paid by the seller if a seller wishes to retain a REALTOR to list, market and sell their property.

I have seen commissions on vacant land as low as 6% and as high as 14%.

The benefit of selling to us is that you do not incur this cost, wait for a lengthy time on the market, and we pay all the other closing costs as shown in the settlement statement below.

Environmental Inspection Costs on Vacant Land

Environmental Inspections can be a significant cost when figuring out Who Pays Closing Costs on Land Sale in Florida. Now proactive sellers who wish to have a competitive edge will want to provide anaylisis on this so a buyer knows what they are getting into including costs for any mitigation.

If a buyer is responsible for this, it may deter any offers to a seller as its an upfront cost from the buyer that could turn into a loss if they decide the costs of mitigation are too high.

Who Pays Closing Costs on Land Sale in Florida

In Florida, the party responsible for paying closing costs can vary depending on the terms negotiated between the buyer and the seller. However, there are certain customs and practices that often dictate who pays for what:

1. Seller’s Responsibility: In many cases, the seller is responsible for paying the real estate agent’s commission as mentioned, which is typically a percentage of the sale price. Additionally, sellers often cover the cost of preparing the deed, title insurance and any outstanding liens or assessments on the property.
2. Buyer’s Responsibility: Buyers typically bear the brunt of closing costs related to appraisal fees, survey fees, and attorney fees. Buyers may also be responsible for paying for any inspections they wish to have done on the property.
3. Negotiation: Ultimately, who pays for closing costs can be negotiated between the buyer and the seller as part of the purchase agreement. Some buyers may request that the seller contribute towards closing costs as part of the negotiations, especially in a competitive real estate market.

Settlement Statement on Who Pays Closing Costs on Land Sale

Below you will find the settlement statement on a recent land sale we did and paid for all the closing costs on.

Tips for Managing Closing Costs on Vacant Land

Whether you’re buying or selling land in Florida, there are several strategies you can employ to manage closing costs effectively:

1. Budget Accordingly: Be sure to budget for closing costs in addition to the purchase price of the land. Closing costs can add up, so it’s essential to factor them into your overall budget.
2. Shop Around: Don’t be afraid to shop around for services such as title insurance and appraisal to ensure you’re getting the best deal possible.
3. Negotiate: If you’re a buyer, consider negotiating with the seller to see if they’re willing to contribute towards closing costs. Conversely, if you’re a seller, you may want to negotiate the terms of the sale to minimize your financial obligations.

In Conclusion Who Pays Closing Costs on Land Sale

Closing costs are an inevitable part of any real estate transaction, including land sales in Florida. By understanding who typically pays for these costs and employing some strategic planning and negotiation tactics, both buyers and sellers can effectively manage their financial obligations and ensure a smooth closing process. Be sure to consult with professionals and thoroughly review the terms of the purchase agreement to avoid any surprises along the way.

I hope this helped you out and don’t forget to check out the Seller’s Checklist when preparing to sell Land!!