Thinking about selling your land? Great! But before you celebrate, let’s talk about something that often catches sellers off guard: closing costs. These extra fees can sneak up on you, but don’t worry—we’ll help you understand them so there are no surprises.
Key Mistakes That Landowners face When Selling Land:
In some places, closing costs may be surprisingly high. For example, in Florida, they rank among the highest in the country. So before you sign on the dotted line, know what to expect and who is responsible for paying these costs.
As we mentioned, closing costs may affect your final payment. Many sellers overlook these expenses and realize later that they have reduced their earnings.
Title fees cover the legal verification of your property to ensure the sale is valid and that you receive a clear title with no ownership disputes. These fees typically include title insurance, which protects both you and the lender from potential claims, errors, or undisclosed liens on the property.
Title fees may also cover a public records review to verify ownership history. Costs generally range from $500 to $1,000, depending on the complexity of the property’s history.
Common title fees include:
Escrow fees cover the cost of a neutral third party (an escrow company) managing funds and documents during the transaction. This ensures that all contract terms are met before the sale is finalized. Escrow services provide secure handling of money and paperwork, helping both buyers and sellers navigate the process smoothly.
Estimated costs typically range from $500 to $1,000, depending on the property’s sale price. These fees may also include verification services to confirm ownership and ensure compliance with legal requirements.
Together, title and escrow services ensure that ownership of the land is legally transferred and all documents are handled correctly. These services verify that the land is legally yours to sell and protect you from potential issues with the property's title.
Attorney fees cover legal services required to ensure a smooth and legally sound land sale. Real estate attorneys review contracts, verify title documents, and oversee the closing process to protect your interests.
Estimated costs typically range from $500 to $3,000, depending on the complexity of the transaction and state requirements. In some states, a real estate attorney is required to manage the closing process and review all legal documents.
Common Attorney Fees for Selling Land Are:
A survey fee covers the cost of a professional land survey to confirm exactly where your property begins and ends before a land sale. This typically includes boundary verification to prevent disputes, encroachment detection to identify any structures crossing property lines, and survey updates if required by a buyer or lender.
Prices usually range from $400 to $1,000, depending on the size and location of the property.
An appraisal is conducted by a licensed professional to determine the fair market value of the land. If the buyer is financing the purchase, most lenders require an appraisal to ensure the loan amount doesn’t exceed the property’s worth. In this case, the buyer is typically responsible for the cost.
For cash sales, appraisals aren’t mandatory, but some buyers choose to get one to avoid overpaying. In these cases, they might include a contract contingency requiring the land to appraise at or above the agreed price.
Appraisers consider several factors such as property size, location, condition, and market trends to determine land value.
Some states and counties charge a transfer tax when land ownership changes hands. This tax is applied at the time of sale, and the cost can vary depending on your location, it may be a flat fee or a percentage of the sale price. To avoid surprises, it’s important to check local regulations and understand how much you might owe when selling your land.
Every time property ownership is transferred, a recording fee is paid to officially document the sale with the local government office. This ensures that the new ownership is legally recorded and accessible in public records.
The cost of recording fees varies by county and city, as each sets its charges. Fees are typically based on factors such as the number of pages in the deed and the property value. In most cases, the buyer covers this expense as part of their closing costs, but the seller and buyer can negotiate who pays.
If your land is still financed, you will need to pay off the remaining balance before completing the sale. Some lenders impose early repayment penalties, so it's important to check with your lender to see if this applies to your situation. Prepaid interest may also be required to cover interest accrued before the final loan payment.
When selling land, additional costs may arise beyond standard closing fees. Here are some key expenses to keep in mind:
Some of these fees will likely be your responsibility, while others can be negotiated with the buyer. It all depends on the location, property type, and terms of the sale. Understanding these costs upfront helps you plan and avoid unexpected expenses.
If you’re already aware of these fees, it’s a good idea to discuss them with your buyer early in the process. That way, there are no surprises when it’s time to close the deal. And if you need help sorting through the details, we’re here for you!
At UNITY, we provide further assistance to ensure a smooth and stress-free sale.
Closing costs can add up, but there are ways to minimize them. Here are some smart strategies you may implement or already know:
When you're ready to sell, UNITY makes it effortless. No hidden fees, no surprises. Our expert team will guide you through every step, ensuring a smooth and successful land selling experience.