Congratulations! You’re now almost at the finish line. But before you pop open the champagne, you have to go through the closing process to transfer the property to the buyer legally.
Closing on a Virginia property can be overwhelming and exhausting. However, familiarizing yourself with the process and various VA closing costs can make the process smoother and easier.
- Closing costs, also known as “settlement costs,” are the final expenses to complete the real estate transaction.
- Closing costs are separate from the price of the property.
- The seller and the buyer have to pay specific closing costs.
- In Virginia, the closing process is can be carried out by an escrow company, a title agency, or attorney.
- Due to different fees and statute requirements, closing costs vary in municipalities and states.
💰 CALCULATE YOUR CLOSING COSTS IN VA
What are Closing Costs in Virginia?
Closing costs in Virginia are a set of expenses that the seller and the buyer must pay to finalize the real estate transaction and transfer the ownership of the house. Some are closing costs negotiable, while others are non-negotiable, like taxes charged by your state or local jurisdiction.
With a typical home value of $382,958, the average closing costs in Virginia for sellers may amount to $30,636-$38,295.
Who Pays Closing Costs in Virginia?
The answer to who pays for the closing costs in Virginia is, both the seller and the buyer. Although the buyer has to pay more number of fees as closing expenses, a seller has to pay a higher amount as closing costs.
Most of the sellers closing costs in Virginia are deducted from the proceeds they get for the property. As such, the seller needs enough equity to cover some of the expenses.
Real estate agents generally know who typically pays what for the closing costs in Virginia. So, it’s important to seek professional advice. Hiring an experienced agent can help lower estimated closing costs for seller in Virginia. Remember, some of the fees are negotiable, which your agent can discuss with you.
» Top Real Estate Agents: Check out the top real estate agents who can guide you in your real estate journey.
How Much are Closing Costs in Virginia?
The estimated closing costs for sellers could reach up to 8% to 10% of the final sale price of the home, not including the mortgage payoff. The biggest closing cost (5%-6%) the seller has to pay is the commission of the listing and buyer’s agent. The remaining 3%-4% includes expenses like home inspection fee, HOA fee, estoppel fee, etc.
Let’s take a deeper look at sellers closing costs in Virginia!
» How Much are Closing Costs in Virginia: Read all about how much closing costs are paid by sellers and buyers in Virginia!
What Are the Typical Closing Costs in Virginia for Seller?
1. Attorney’s Fee
Sellers usually hire real estate attorneys in Virginia to review the sales contract, especially when no real estate brokers are involved or there are any legal issues with the property. However, you can hire a real estate attorney even if your case is not unusual.
So, who pays attorney fees at closing? In most cases, the seller and buyer hire different attorneys to represent their best interests. However, if you and the buyer decide to hire the same attorney, the attorney fee will be split.
Typically, real estate attorney fees for sellers in Virginia can range from $400 to $700, depending on the type of home being sold and the type of sale it is.
2. Concessionaire Tax/ Congestion Fee/ Grantor Tax
Grantor tax is levied by the state and must be paid by the seller. This additional tax came into effect in July 2013. It is charged at the rate of $1 for every $1000 sale price of the property or the fair market value.
3. Credits Towards Closing Costs
You can offer to help buyers with closing costs to make the property more attractive, especially if you live in an area where market competition is low. These costs are called closing credits or seller concessions and are paid at closing.
4. Documentary Stamp
The documentary stamps refer to the excise tax levied on the documentation that transfers the property from you to the buyer. It is like paying tax on a property deed or some other official documentation.
5. Escrow Fee
An escrow is a neutral third party that holds certain funds or the property until the contract conditions have been met. It protects the interest of both parties by ensuring that either does not wrongfully back out of the deal and lose money. Typically, the escrow fee will be split between the buyer and you as both parties benefit from it.
6. Home Inspection Fee
Home Inspections are non-invasive visual examinations of homes. Home inspections can reveal significant defects in the property that a homebuyer may miss.
Virginia home inspection entails identifying any major defects and issues in the house that you must resolve before selling it. These may include plumbing issues, water damage, mold, appliance malfunction, etc. This can be done before the property is listed on the market (pre-inspection) or just before the closing.
Disclosure laws in Virginia follow the rule of ‘caveat emptor,’ i.e. let the buyer beware. As the seller, you are not obligated to inform the buyer about any defects. However, you must not actively conceal or hide the flaws.
Virginia seller disclosure requires sellers to declare any known issues and defects with the property. Some of these are:
- Structural defects: The buyer must be informed about leaking roofs, loose masonry, foundational cracks, etc.
- Factors that pose health risks: You must disclose the presence of asbestos, lead paint, etc., to the buyer. However, Illinois law does not mandate radon testing and identifying the presence of mold.
- Soil problems: You must identify any issues related to the foundation of the home that could potentially render the house inhabitable. This includes underground pits, mines, or other instability.
- Flood risk: You must provide a list of flooding instances and water damage caused by pipe leaks, broken sewer lines, leaking roof, etc.
- Pest infestation: You must also offer a list of any previous or current infestations of termites or other wood-boring insects.
- Utility defects: You must list defects such as malfunctioning heating and air conditioning systems, damaged lighting fixtures, faulty wiring, leaky ventilation systems, etc.
» What is a Home Inspection Cost in Virginia: Here’s how much you’ll have to pay for closing costs in Virginia!
7. Home Warranty Fee
A home warranty covers the maintenance cost of the devices and appliances in the house for a limited time period, like, days, months, or years. You may offer a home warranty to make the property more desirable for buyers.
8. Homeowner Association(HOA) Fee/ Document Fee
If you are a part of the Homeowners Association(HOA), you will have to pay the fee due until the closing date and clear the remaining dues, if any. In most cases, you will not be able to close on the house until the dues are paid.
However, if the issue persists and is not resolved before closing, the HOA can place a lien on your house and even initiate foreclosure.
» Foreclosure in Virginia: How to stop foreclosure in Virginia? Here’s a guide.
9. HOA Estoppel Fee
The HOA Estoppel letter is a legally binding document containing details about the financial obligation, like the monthly fee, that the buyer will have to pay after closing. It also offers information about any unresolved dues you may owe.
The HOA Estoppel fee needs to be paid by you as part of the process. It ranges from $200-$500.
10. HOA Transfer Fee
If you are a part of the Homeowners Association, at the time of closing, the ownership of your house needs to be transferred to the buyer in HOA records. HOA transfer fee is a one-time non-negotiable charge that you pay the HOA to update their records.
11. Mortgage Payoff
Mortgage payoff will most likely be one of the biggest items on your list of fees. You’ll have to pay off any remaining balance of the mortgage on your property with the proceeds of your home sale at closing. This includes interest accrued from the last payment to the day of closing and any penalty the lender might charge you for prepayment of the mortgage.
Contact your lender and discuss the requirements to pay off the mortgage to get the overall details of your closing costs. Also, check for the loan documents if there’s any prepayment penalty with your mortgage.
» Mortgage Lender Virginia: Read to know about mortgage lenders in Virginia.
12. Municipal Lien Search
A Municipal Lien Search can help you uncover any unrecorded liens, code violations, permits, taxes, and utility bills, associated with the property. While many sellers forego a municipal lien search, it can complement a title search, especially since it offers additional information about open or expired permits.
An open or expired permit can be a thorn in the side for both you and the buyer as it can lead to further expenses and delays in the sale. On average, a municipal lien search costs $200.
13. Owner’s Title Insurance
The title insurance cost is based on the property value and is decided by the state. Primarily, you, the seller, will pay for the owner’s title insurance to protect the buyer against discrepancies relating to the ownership of the property or false documentation. Additionally, title insurance takes care of any back taxes, liens, ownership clauses, etc.
Both parties can negotiate who purchases the owner’s title insurance.
» Who Pays Owner’s Title Insurance in Virginia: Find out who pays owner’s title insurance in Virginia.
14. Property Taxes
The owner of the house has to pay property tax amounting to 1.1% of the home value to the local government. It can be paid annually or at the time of the real estate transaction. You must pay prorated property tax according to the date of purchase at closing.
15. Real Estate Broker Commission
The agent’s commission is the biggest chunk of the cost you need to pay. However, it’s negotiable and typically paid from the proceeds of your house sale. Likewise, don’t forget to contact your agent to negotiate the fees. In total, you are expected to pay the real estate agent commission that ranges from 4% to 6% (listing agent commission + buyer’s agent commission which costs 2% to 3% of the total sales price).
If you want to avoid paying hefty commissions, you can list your property for a flat fee or with no commission at all! Choosing FSBO (For Sale by Owner) and listing your home with a Flat Fee MLS listing service Virginia can help you save more money. What’s more, you have to pay zero commissions if your buyer has no agent.
» How to Sell a House by Owner in Virginia: A Comprehensive Guide
16. Settlement Fee/Escrow Fee
Settlement fee is the compensation paid to a settlement agent for their closing services. A settlement agent is a third-party intermediary who helps you and the buyer complete the transaction. They clear the house for sale and transfer the ownership to the buyer and the respective funds to you.
Depending on the state laws, the settlement agent could be a title company, an escrow company, or an attorney. In 21 U.S. states and the District of Columbia, it is mandatory for an attorney to be a part of the deal closure.
17. Utility Bills
You must pay all utility bills till the date of purchase of the house. The title company usually checks for unpaid bills and utility liens. If there are any dues, you must clear them at closing.
18. Virginia Recording Fees
A recording fee is paid to the local government to register the change in ownership of a house or sale of a property in the public record. It also records mortgages and other liens against the house. Usually, the state recording fee in the state of Virginia is paid by the seller. However, you can negotiate it with the buyer.
How to Reduce Seller Closing Costs in Virginia?
1. Opt for a discount broker or a flat fee realtor
As compared to traditional brokers who charge 6% of the sales price as commission, discount real estate brokers in Virginia only charge 3%-4% of the sales price for their services. Some low commission realtors offer higher concessions if you let them represent you as buyer’s agents for your next real estate purchase.
» Largest Mortgage Brokers in Virginia: Read to know about Virginia mortgage brokers.
2. Choose “For Sale By Owner”(FSBO)
Sellers can save up to 3% commission and cut several costs by opting for “For Sale By Owner” services. Houzeo offers Flat Fee MLS packages for FSBO sellers that list properties on the MLS and make the selling process easier and smoother. Additionally, if the buyer is unrepresented, with Houzeo, sellers can sell their homes for zero realtor commission charge!
» Flat Fee MLS: Everything You Need to Know
3. Research and compare
You can save more cash on closing costs for seller, such as the pest inspector or homeowner’s insurance agent, title and escrow companies that are more economical. Browse and ask friends who have already experience hiring one.
4. Ask to roll pay your closing costs into your loan
Your lender may offer to pay the seller closing costs at closing and add it to your mortgage. However, it comes with a price. The lender may charge you a higher interest on the loan, which now also includes the closing cost.
5. Negotiate realtor fees
While traditional real estate agents usually charge 6% of the sale price as commission, this number is not set in stone. You can negotiate the fee with your realtor.
6. Ask the buyer to cover seller closing costs
Buyers may agree to cover closing costs for sellers if the market is competitive and fewer houses are in the market. Alternatively, you can raise the listing price according to closing costs to cover full or partial closing costs.
» How Much are Closing Costs for Buyer in Virginia: Check out what are the buyer closing costs in Virginia.
VA Closing Costs Calculator
Closing costs in Virginia vary heavily according to location and mortgage rates. So, how to calculate closing costs in Virginia?
Houzeo’s Closing Costs Calculator VA is a free tool that factors in these elements to help sellers estimate their closing costs. It shows the user a detailed list of itemized costs and highlights junk costs that can be avoided.
Houzeo’s Seller Closing Costs Virginia Calculator is frequently calibrated to give you the closest estimate according to market conditions.
» Calculate Seller Closing Costs in Virginia: Check out the seller closing costs calculator for calculating the closing costs for the seller.
How Should I Prepare for My Virginia Home Closing?
Your agent will schedule the closing for you. Before the closing day, you must review and examine the legal paperwork thoroughly and consult your agent or real estate attorney.
1. Review Your Closing Documents in Advance
As mentioned earlier, it is necessary to check your closing document prior to the said date. Read them with precaution with your attorney, and keep in mind the provisions and regulations stated in the deed, record, or contract. Here are some crucial documents that you will most likely sign during closing.
- The HUD-1 or Closing Disclosure: This form must be provided to the borrower at least 3 days prior to the closing date. For instances where homes are purchased with a mortgage, you’ll need to get a closing disclosure which contains all the costs in detail. But if your transaction is all in cash, you may need to get the HUD-1 (although it’s less common these days).
These are vital documents that detail the amounts you’re being charged for (all fees, including taxes, insurance, escrows, credits, etc.) Remember, depending up on how much equity you have in the property, you might be asked to bring a check (or send a wire) on the closing date. Ensure there are no typos in your name, address, property address, bank info, and other details. Then review every amount and the totals to ensure there are no mathematical errors or inadvertent costs. You’ll be surprised how many times these documents have errors – this is one of the reasons our founder launched Houzeo.
- Other Disclosure Requirements Forms that You May Need to Complete
- Septic Waiver Disclosure Form
- Military Air Installation Disclosure Form
- Defective Drywall Disclosure Form
- Property Previously Used for Methamphetamine Manufacture Disclosure Form
- Building Code Enforcement Action/Zoning Ordinance Violation Disclosure Form
- Disclosure Statement for Certain New Dwellings
- The Deed: It’s an essential title document that enables the legal transfer of title from the seller to the new homeowner—or in this case, the buyer.
To avoid any errors in the paper, review the document thoroughly. Remember to read and confirm the details with your real estate attorney, including the legal description of the property, the deed book page, the deed book, and lastly, 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 the Seller’s 5 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.
2. Bring TWO Forms of Official ID
Since there will be a licensed notary present during the closing to verify you legally swear of your identification, bring a valid driver’s license or passport. Also, never forget to bring a secondary I.D. for emergency purposes—or in case something may come up.
3. Ask Questions
If this is your first time selling a house in Virginia, it’s important to ask questions if you have any. Whether these are legal issues or about the property’s condition, you have to contact your real estate attorney or agent for professional advice or opinion. Make sure that before the scheduled closing appointment, you have prepared the documents and all the necessary things to bring in the closing process.
Developing an understanding of the cost of selling your own home in Virginia is important for you as it can greatly impact your profits. Additionally, Virginia closing costs are an important factor in calculating the listing price of your house.
If you have not begun your real estate journey yet, opt for Houzeo. Houzeo.com, a tech company, provides an unbeatable combination of maximum savings, cutting-edge technology, and 5-star customer support. With its 100% virtual service, it helps home sellers list their properties without any hassle from the comfort of their homes, while also allowing home buyers to explore properties and make offers online. Houzeo’s customer-centric approach, advanced technology, and flat fee packages make it an ideal choice for those looking to avoid paying high commissions and closing costs in Virginia.
Note: This is only a quick guide for all the sellers in Virginia. Despite most information readily available online, seeking expert advice helps progress the process of selling a home.
Frequently Asked Questions
1. How long does it take to record a deed in Virginia?
It usually takes 4-8 weeks from the date of submission of documents to record a deed in Virginia.
2. Do I have to pay capital gains tax in Virginia?
Yes. The state of Virginia taxes capital gains as income. The current capital gains tax rate is 5.75%
3. How is closing cost for sellers calculated?
Closing costs are a sum of specific settlement expenses. These vary according to the location, mortgage rates, and market conditions. Houzeo's closing cost estimator is a free tool sellers can use to get a close estimate of settlement costs.
4. Who pays for title insurance in Virginia, the buyer or the seller?
Usually, the seller pays for the owner's title insurance in Virginia. However, you can negotiate this cost with the buyer. If the buyer has opted for a mortgage, they will pay for the lender's title insurance. Click on this link for more information on who pays owner's title insurance in Virginia.
Want to know what title insurance covers in Virginia? Or what is the cost of title insurance in VA?
- Sell My House Fast for Cash Virginia: Find out the different ways to sell your Virginia house fast for cash.
- Closing Cost for Buyers in Virginia: Want to know how much closing costs are for buyers in Virginia, click to know further.
- Buyer Closing Costs Calculator Virginia: Calculate the buyer closing cost in Virginia.
- For Sale By Owner Contract: Check out how to create a contract for an FSBO transaction.
- Cost of Title Insurance in VA: Find how much is title insurance in Virginia.
- Cash Home Buyers in Virginia: Read the blog to know about the companies that buy houses for cash in Virginia.
- Who Pays for Lender’s Title Insurance in Virginia: Read the blog to know who pays for lender’s title insurance in Virginia.
- Why do You Need Title Insurance: Read our blog to know the significance of title insurance.
- Home Inspectors of Virginia: Know about the best home inspectors in Virginia.
- Selling an Inherited House in Virginia: Read the blog to know how to sell an inherited property in Virginia.
- Where to Get Preapproval for a Mortgage: A comprehensive guide!
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