Looking to learn about and estimate closing costs in NJ? Here is all you need to know!
When buying or selling a property in NJ, both buyers and sellers are required to pay closing costs, also known as transaction or settlement fees. These costs vary and are different for buyers and sellers.
At the sale of the property you will find fees on the “settlement statement”. Other fees are incurred up front in the due diligence process. Before a buyer gets to closing we always recommend the proper due diligence and hiring these professionals costs money. Here are a few of the costs buyer’s incur in due diligence. The prices vary based on the size of the home and lot you are buying.
Home Inspection AVG $500 but ranges from $425-$600 or more depending on the size of the house. The bigger the house and the more systems there are to inspect the more costly it is.
Tank Sweep $200-$300
Radon Test $125-$200 (if home inspector does it included in their package it will be around the $150 range. If you hire an independent company to do it they will charge in the $250 range.
Termite Inspection $75-$150
Sewer Line Scope $300-$400
Survey has a big range depending on the size of the lot but $650-$950 seems to be the average range.
Chimney Inspection- $400 There are different levels of inspections for different fireplaces. Level 2 inspection is recommended for wood burning fireplaces. If the home has multiple fireplaces the price will be higher.
Pool Inspection- $500 for an inground pool inspection.
Septic Inspection (if applicable) $300-$600 (the size of the tank makes the price vary, you can also reach out to your local health department to verify the bedroom count the septic system supports as well as if they do the inspections for a discounted price.)
Well Inspection- There are two types. 1- Quality of the well itself and 2- Quality of the water. The water quality inspection is typically done by the seller but buyers should still get the well itself inspected. The physical inspection of the well runs you about $300-$400
Mold inspection $150 PER SAMPLE
Asbestos $100-$200 PER SAMPLE
Buyer’s closing costs include due diligence costs like home inspections, a survey, tank sweep, radon test and appraisal, title insurance, the mortgage points and fees lenders charge to originate loans, escrow company charges and attorney fees. Seller’s closing costs include a real estate transfer tax, title recording fees, Realtor commissions and attorney fees. Closing Costs add up, so you should be aware of them and be able to estimate how much they are and know if you have to pay them as a buyer or seller? A Signature Realty NJ agent can help you estimate what your closing cost will be so you are not caught by surprise.
- Buyer’s Costs are about 2-3% of Purchase Price.
The more expensive the home the higher the closing costs. Home buyer’s closing costs in New Jersey average between 2% to 3% of the purchase price. A home sold for $400,000 will run approximately $10K in closing costs. The closing costs line items on the buyer’s side include: due diligence items like home inspections and appraisals, title insurance fees, attorney fees, loan origination fees and your first month’s (PITI) mortgage payment (Principal, Interest, Taxes and Insurance.) In NJ their is also te mansion tax which is 1% of the purchase price of a home $1M or more. So if you buy a $1,500,000 home expect to pay an extra $15,000 in mansion tax at the closing.
- Seller’s Costs are about 6%-8% of Purchase Price.
On the seller’s side, closing costs include real estate transfer taxes, Realtor’s commissions, attorney fees, recording fees and any concessions the seller might make to the buyer called “buyer’s credits;” which is money the seller agrees to pay the buyer at closing if and when problems are found during the home inspection.
- Closing Costs Include Lender and Third-Party Fees.
When a seller sells their home to a buyer it’s considered a transaction (primarily) between two individuals, or “parties.” Generally, both parties have representation, real estate agents and often lawyers, and both also use the services of a neutral party, like the escrow company; these parties are called “third parties” and charge commissions and fees.
Other third parties include a title company, an insurance company and everyone’s favorite “third party,” the government, which includes the municipality or town government, the county government and the government of the State of New Jersey where the property is located.
Understanding closing costs is as simple as calculating how much money these third parties charge to work on and complete your transaction and make it all legal. Finally, you need to know whether or not you pay them as the buyer or as a seller? It’s as simple as that.
- Closing Costs Can Be Estimated in Advance.
Once a buyer has made an offer which has been accepted by a seller and an escrow account is opened with an escrow company, or lawyer, a SETTLEMENT STATEMENT can be created. This statement can then be shared with you by your real estate agent. It will show you all the closing costs on both sides of the transaction so you can budget accordingly. Until then, it’s good enough to be aware of and estimate closing costs when making your budget to buy or sell based on 2-3% for buyers and 6%-8% for sellers.
(Contact us at Signature Realty NJ! We’re happy to help review your estimated closing costs.)