If you are thinking about selling your home in Indiana, knowing how much the selling closing costs are will not only help you plan financially but also give you a strategy for pricing your home as well.
In Indiana, the typical seller closing costs are made of up of fees not only associated with directly selling your home such as real estate fees but will also include items for the transfer of ownership such as the title insurance, and even deed preparation.
Below is a list of the average seller’s closing costs and who pays them in Indiana. Keep in mind, in certain regions of the state, some fees are usually customary expenses but can also be negotiated between the buyer and seller. This estimation of expenses is to give you a good working knowledge of what can be expected when you sell your home.
Keep in mind, if you have a mortgage, an equity line of credit or a second mortgage, these are considered liens and must be paid off at closing.
Title Insurance in Indiana
There are two types of title policies in Indiana for real estate transactions. The first is known as the owner’s title policy and the second is the lender’s policy.
Owner’s Title Policy
The owner’s policy is a one-time issued policy and is good for as long as the buyer owns the property. The amount covered is directly correlated to the sales price. The owner’s policy is the only policy that covers the buyer against future claims such as forgery, mistakes in record examinations or undisclosed heirs. This is a one-time premium and is collected from the seller at closing. Although this title policy is not required in a real estate transaction, it is highly recommended.
Who pays for the owner’s title policy in Indiana? Although this can be a negotiated item, the cost of the owner’s title policy is normally paid by the seller. This may be considered a customary seller expense for a region. For instance, in Indianapolis, the owner’s title policy is normally paid for by the seller. However, if you live outside the Indianapolis area, ask your Realtor if this expense is paid for by the seller.
How much is the owner’s title policy in Indiana? The fee or premium is a coverage rate calculated based on the price of your home. For instance, a home that sells for $200,000 should have a title insurance fee around $575.
Lender’s Title Policy/Loan Policy
Just like the name implies, this title policy is required only if the buyer is obtaining a mortgage. The mortgage lender will require a title policy to protect the lender’s interest in the property. The buyer does not benefit from the lender’s title policy should a claim arise.
The lender’s title policy is a fee usually paid for by the buyer and is collected as part of the buyer’s closing costs.
The amount of the loan policy is normally related to how much is being borrowed and does not reflect the purchase price.T
Title Search & Exam Fees for Indiana
Since the seller must deliver to the buyer a clear title at closing, the expenses incurred from the title search and exam are considered the seller’s responsibility.
A detailed title search involves going through historical public records to find outstanding liens, regulations, errors and relevant interests for a particular property. A title search and exam also reviews past deeds, trusts, and wills. The examiner will also try and verify that all prior mortgages and other liens have been paid off.
How much does a seller pay for a title search in Indiana? The cost may vary depending on your location, however, the average fee should run between $175-$200.
Closing Fee
The closing fee is paid to an attorney or title company for closing the real estate transaction. The closing fee is completely negotiable between the buyer and seller. This is where regional customs come into play regarding who pays for what. I have seen this fee paid by 100% by the buyer. I have also seen that expense split between the seller and buyer.
Regardless of who pays it, the closing fee can vary widely between title companies. For instance, a cash transaction could be cheaper than a mortgage funded purchase. I have seen closing fees range between $400-$800.
Closing Protection Letter
A closing protection letter is issued by the title company on behalf of the underwriter. The insured closing letter benefits the buyer’s mortgage lender and basically agrees to compensate the lender should the title company make a mistake at closing.
Who pays for the closing protection letter in Indiana? Since this is a lender requirement, the buyer normally pays this fee cost ranges between $25-$30.
The title company can also issue a closing protection letter to the seller as well. If that happens, then the seller will pay that fee and the price is similar to what the buyer pays $25-$30.
Deed Preparation in Indiana
To prepare a deed means to transfer ownership from the seller to the buyer. The deed is a legal document prepared by an attorney. The seller typically pays for the cost of creating the deed in Indiana. The price can vary depending on the attorney, however, the average fee is $75-$100.
Real Estate Commissions for Sellers in Indiana
Real estate fees are the fees paid to the listing brokerage firm to market, negotiate and co-operate with the brokerage firm who procures the buyer for your home. Your real estate agent doesn’t get to keep all the money. Those fees are not only divided among another firm but within your agent’s firm as well. Co-operation among other brokerage firms to get your home sold is common and typical in Indiana.
Real estate fees are not fixed amounts. The fees are negotiable. Just make sure you are comparing apples to apples in terms of what you are receiving regarding marketing, agent experience and time spent on your home. Sometimes cheaper isn’t always better.
In Indiana, real estate fees to sell your home are paid by the seller. The fees, like all the items mentioned above, are collected at the time of closing and will come from your proceeds.
Home Warranties
Offering a home warranty on the sale of your home is optional. However, the buyer may request one and ask you to pay for it. A typical home warranty can cost between $375-$500 depending on what’s covered and the company you choose. It may not be a bad idea to have a home warranty secured on your home during the listing, especially if your water heater or furnace is older and almost near the end of its useful life.
Otherwise, you may be replacing a water heater right before closing. Sellers in Indiana are required to maintain their home in the condition the buyer saw it at the time the offer was written and accepted.
Seller Closing Costs in Indiana: The Net Sheet
Estimating Seller’s closing costs in Indiana can be done alongside your Realtor. Prior to listing your home for sale, your agent should sit down with you and discuss market conditions, and provide with an estimated sales price. In addition to this information, your agent can prepare a closing cost net sheet showing your expenses and your bottom line.
When you receive an offer, request another net sheet based on the actual figures in front of you. This will allow you to have accurate figures.
The preparation of the new sheet will provide you with a basic idea of what to expect at the closing table.
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