What are the Seller Closing Costs in Alabama?

what are the seller closing costs in alabama?
Important: The blog article below is informational and should not be deemed as legal advice. Houzeo and its bloggers are not attorneys. For any questions and legal advice, consult a licensed attorney.

According to Zillow site home values, the median home in AL sold for $143,072. Here’s how you can save approximately $4,292 in commissions on an average AL home by selling it For Sale By Owner on Houzeo.com

Congratulations! You’ve made it this far. Although closing a property can be considered as an exciting moment, it can also be so frustrating if you have no clue to what you’re doing. So, to get you prepared for the grueling process, you need to understand that real estate rules vary from state to state, county to county. And Alabama is an expensive state. Also, several regulations make it one of the most tedious states. As a Houzeo For Sale By Owner (FSBO) seller, we assume you are now ready for the closing. To help you accomplish the transaction, here is our comprehensive Alabama FSBO Home Seller Guide to guide you.

Did you know Houzeo’s Gold Plan provides relevant Federal and State Seller Disclosures?

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In this section, we’ll discuss the key documents and expenses you need to be aware of when closing on a home in Alabama.

What are the Different Home Seller Closing Costs in Alabama?

  1. Mortgage Payoff/ Prepayment Penalty. The mortgage fee is one of the most vital items included in the list of your fees. The fee can vary on your lender. The fee includes the principal balance, a recording fee, interest accrued from the last payment, or any statement fee the lender might charge to you.
  2. Real Estate Broker Commissions. Like with other states, real estate agent commission fees typically in Alabama are on average of 5% to 6% to a home’s final sales price. Basically, split between the listing agent and buyer’s agent. If you’re selling FSBO via Houzeo, congratulations… You’ve likely saved thousands by paying $0 in listing agent commission! Go on. Pop a bottle of the finest Champagne or Scotch. You deserve it.
  3.  Property Taxes. These are outstanding payments, utility bills, prorated property taxes, or homeowner’s insurance. You may need to pay the buyer a prorated amount of property taxes, or the buyer may need to credit you. 
  4. Title Insurance: The title insurance policy provides buyers the protection from any financial loss or property title issues. It’s a guarantee for the purchaser to get a clear title of the home, free of other legal encumbrances that could threaten the buyer’s interest in the property. In the state of Alabama, the typical cost is $685.
  5. Attorney Fees. Real estate attorneys help manage and assist you on the purchase and sales contract—and all legal documents during the closing process. In Alabama, the standard fee could be between $75 to $100 depending on the service you needed.
  6. Property Survey. Home surveys in Alabama typically cost an average of $600 to $900 (depending on the area and the amount of time required) to determine the boundary and location of your property. So, the buyer could get an assurance of what they’re actually paying for.
  7. HOA Dues, Document Fees: If the property falls under a Homeowners Association or a condo, you may be subject to various other charges. These include HOA dues, a document fee at the beginning of Escrow, and a transfer fee at the end of Escrow. See more about Alabama Homeowners Association Act.
  8. Home Inspection and Repairs. These are several repairs sellers needed to do after performing a home inspection. Although buyers often hire a home inspector to examine property defects, home sellers can do so. Other inspection fees could also include Lead-Based Paint Inspection, Pest Inspection, etc. The usual cost is $300 to $500.
  9. Appraisal Fees. A professional appraiser will evaluate the cost or market value of your property. The cost is usually around $200 to $300 but may depend on the location or area of the specific property.
  10. Transfer Taxes. A fee imposed by the state that is part of the closing costs for the legal transfer of the home from the seller to the new homeowner. In Alabama, the buyer usually pays for this, but he/she can negotiate with the seller. The real estate transfer tax rate is $0.50 per $500 of the home’s purchase price.

How Should I Prepare for My Alabama Home Closing?

Don’t worry. Your closing agent will set a date for your closing. To get you ahead of what to do, here’s a simple guide to prepare for your closing day.

  1. Always Review Your Closing Documents in Advance. It’s important to examine and check these documents at length and understand the provisions involved. To get you familiar with these essential papers, there are some key documents you’ll likely sign at closing.
  • The HUD-1 or Closing Disclosure: If your home is purchased with a mortgage, then you’ll get the Closing Disclosure summarizing the costs in detail. If your transaction is all cash, you may get the HUD-1, although this is usually rare. These documents detail amounts you’re being charged for, your loan payoffs if any, and the net proceeds you will take to the bank. Remember, depending upon how much equity you have in the property, you might be asked to bring a check (or send a wire) on the closing date. Review the paper and make sure there are no typos in your name, bank info, address, property address, and other important details. Then check every amount and totals so there are no lapses on the costs. You’ll be surprised how many times these documents have errors—this is one of the reasons our founder launched Houzeo.
seller closing costs in alabama
  • The Deed: This document enables the legal transfer of title from the seller to the buyer. The transfer tax rate is $0.50 per $500 (0.1%) of the purchase price that means the amount depends on the price of your home sale. Your real estate attorney will help you prepare these legal documents. It’s important to read and review these documents carefully, verifying the details. Check the deed book, the legal description of the property, deed book page, and the Property Identification Number (PIN), if any. We know of a case where a Seller sold a $94,000 property, but the deed also legally transferred over the Seller’s five other homes worth $680,000 over to the Buyer. There was a huge scramble post-closing to correct this mistake. It could have been a nightmare for the Seller if the Buyer didn’t honestly transfer the rest of the properties back to the Seller.

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2. Ask questions when in doubt. Before the scheduled closing date, set an appointment with your closing agent or real estate attorney to review the documents and talk about what you don’t understand. You can also do your research and get familiar with the state provisions and regulations.

3. Don’t forget to bring TWO forms of official ID, garage remote or security devices, keys, and final water meter reading. Since there will likely be a licensed notary involved in the process, you have to bring identifications. Bring a valid driver’s license or passport. Also, carry a secondary ID as well for backup documents. Remember to bring the security codes, garage keys, and other devices to open the house or other rooms. 

Now you’re ready! You might’ve heard horror stories of people being blindsided by high closing costs in Alabama – but that’s often the result of not preparing and educating themselves ahead of time. If you are a Houzeo For Sale By Owner Seller in Alabama, we want you to be one of the most educated home sellers out there. Next step, log on to Houzeo.com and list your home for sale by owner. You’ll be in full control of your listing, and save thousands in the process!

Note: This is only a quick guide for all the sellers in Alabama. Despite most information readily available online, seeking expert advice helps progress the process of selling a home.

Did you know Houzeo’s Gold Plan provides relevant Federal and State Seller Disclosures?

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