When buying or selling a home, there are many costs that come into play. Closing costs are the ones that most people overlook because it’s just a part of the process. But it can be confusing and difficult to understand what exactly you’re paying for and who pays for what.
If you’re selling your house in Nebraska, you need to know who pays for these closing fees! As well as how much they may cost and affect your profits.
In this article, we will discuss everything you should know about closing costs in Nebraska, answer what closing costs are, specifically the closing costs in NE, closing cost inclusions, who pays closing costs, and the pros and cons of paying closing costs in Nebraska. That way, you know upfront what you’ll be paying for at the closing table, without any surprises. So let’s get started!
What are Closing Costs?
Closing costs are the fees associated with completing a real estate transaction (not including realtor commissions) when selling or buying a property which includes:
- Appraisal fee
- Credit report fee (to verify credit score)
- Document preparation fee
- Title search/homeowners insurance fee
- Deed recording tax (if applicable)
- Notary public service fee (if applicable)
- Survey charge (if applicable)
- Any other expense related to transferring ownership of the property from the seller(s).
Typically a title company handles the closing, organizing all the documentation, and managing the escrow account.
What are the Closing Costs in Nebraska?
There is no set standard for closing costs in Nebraska. They vary from city to city and depend on the county where you live.
Generally, as a buyer, you should expect to pay somewhere between 2% and 5% of the purchase price in closing costs when buying a new home.
The seller’s portion of closing costs is less expensive. You should expect to pay roughly 0.6% of your home’s final sale price at closing. Based on the average home value in Nebraska of $218,939, this would translate to $1,313.
However, according to Business Insider, the average closing costs in Nebraska with taxes come out to $2,714.81 and without taxes $2,152.23.
The following list is a breakdown of the sellers closing costs:
|Common Closing Costs in Nebraska||Typical % of Sale Price||Estimated Cost*|
*Based on a $218,939 home- average home value in Nebraska, per Zillow Research data (November 2021)
Nebraska Closing Cost Inclusions
Closing cost inclusions are the specific items that are part of the closing fees. The list of inclusions varies from state to state, but here are some typical items that are found on most lists.
The most common closing cost inclusions are:
- Title search fees
- Attorney’s fees
- Document preparation fees
- Recording fees
- Transfer taxes
- Prorated property taxes
- Mortgage payoff statement
- Home inspection fees (can be paid by either party)
- Credit report fee (can be paid by either party)
- Appraisal fee (usually paid by the buyer, but can be split)
- Loan application fee for the home loan
- Underwriting fee by the mortgage lender
- Loan origination fee
- Prepaid interest
- Private mortgage insurance (PMI)
Who Pays Closing Costs in Nebraska?
So who covers closing costs in a home purchase? That is a good question! Closing costs are paid according to the purchase contract terms made between the buyer and seller. Usually, the buyer pays for most of the closing costs, but there are instances when the seller may have to pay some fees at closing too.
There are times that buyers ask the sellers to pay all or some of their closing costs to reduce the amount of cash they need to bring on closing day. Sellers can agree to help pay for things like property taxes, attorney fees, appraisal inspections, and mortgage discount points to lower your interest rate.
Sellers can agree, in many cases, to make some concessions toward closing costs. In a buyer’s market, for example, sellers may need to sweeten the deal by agreeing to concessions. Even in a seller’s market, some houses simply have been on the market too long, either because the asking price was too high, to begin with, or the property is in poor condition.
In those cases, too, sellers might have to offer some financial incentive to buyers who are willing to consider these slow-moving homes. This is why many Nebraska residents end up selling to one of the top companies that buy houses in Nebraska, like Element Homebuyers, to avoid the hassle.
Pros and Cons of Paying Closing Costs in Nebraska
If you’re considering paying closing costs for the buyer, you’ll want to understand the pros and cons and how they could affect your home sale- including potential issues to watch out for. Below are two scenarios that involve closing costs, their pros, and cons, as well as a third scenario you may want to consider.
1st Scenario: You pay all the closing costs, but the buyer offers more for the home.
Pro: You can lower the down payment amount/ cash a buyer will need to bring to the table, which could help you find a buyer sooner.
How it works: This arrangement works by the buyer offering more than they would otherwise offer for the home, and they would request a credit back from the seller. The result: you’ll pay for the buyer’s closing costs without affecting your bottom line, the sale price.
This scenario would look like this: You list your house for $200,000. A buyer offers you $209,000 with the stipulation that you credit the buyer $9,000 toward closing costs. By including the buyer’s closing fees into the purchase price you net your original asking price of $200,000, and the buyer doesn’t have to bring as much cash to the closing table.
Cons: There is some risk to accepting this type of offer. The appraisal may not support the higher sales price, and you could end up paying slightly more in closing costs.
If the home doesn’t appraise for the higher value, the buyer may not qualify to buy your house. That’s because the lender bases the loan amount on the appraised value, not the purchase price.
Another potential issue is that the closing fees could increase with a higher purchase price. Certain fees fluctuate based on a home’s purchase price. For example, a 6% real estate agent’s commission on a $200,000 home increases by $540 if the final sale price jumps to $209,000. However, if you credit the buyer back the $9,000, you’ll still be out of pocket for the $540 that you wouldn’t have to pay if the buyer paid for their own closing expenses.
Here are some other fees that could change based on the purchase price:
- Realtor commissions
- Deed transfer taxes, if applicable
- Escrow settlement fees
- Title insurance premiums
Percentage-wise, the change in closing fees may seem minimal. Still, you’ll want to consider changes to your bottom line when considering an offer that wraps the closing costs into the purchase price.
2nd Scenario: Offer to pay the buyer’s closing cost to sweeten the deal
Pro: You may be able to find a buyer quickly by offering to cover all the closing costs.
How it works: Buyers with the ability to negotiate, such as in a buyer’s market, might ask for the seller to pay for all of the buyer costs outright- without increasing the purchase price. In this situation, the seller nets less in seller proceeds than if the buyer increases the offer price to wrap the closing costs into the sale.
This scenario would look like this: Using the first example, you list your home for $200,000. After some time on the market, you’re thrilled to receive a full-price offer. However, the buyer asks for a $9,000 credit toward their closing costs. In this case, you’ll net less than your asking price because the buyer hasn’t increased the purchase price to account for the credit.
Cons: As the seller, you’ll walk away with less money when the sale closes. By agreeing to the $9,000 credit to the buyer, you’re essentially selling your home for $191,000 instead of $200,000.
Another issue is the lender can set limits on seller contributions. So while you may be willing to pay for the buyer’s closing costs, lenders have their own requirements. Depending on the buyer’s loan type, sellers are limited in how much they can contribute.
If you do offer to pay, don’t forget that you’re still on the hook for the seller’s closing fees. Along with covering the estimated 2 to 3% in buyer fees, adding seller fees of 6 to 10% can make a substantial dent in your bottom line. So when negotiating an offer that includes a seller credit, you can ask the agent for a seller net sheet that details your estimated net proceeds or the amount of money you’ll walk away with after selling your property.
3rd Scenario: Sell your house to a “We buy houses Omaha” homebuyer.
Pros: This option is great if you need to sell your house quickly to avoid foreclosure or bankruptcy. Homebuyers can close quickly because they don’t require lender approval or have to wait on inspections or appraisals. For example, in 2021, the average time it takes to sell a home in Nebraska — from listing through closing — is approximately 99 days. That’s 64 days to get an offer, plus the typical 35-day closing period. A homebuyer can close in as little as 7-days or longer if needed.
Homebuyers are familiar with unique selling situations like probate, liens, code violations, problem tenants, and more. This can be extremely helpful if you’re trying to sell a house you’ve inherited, is a rental property, or has unpermitted renovations, for example.
If your home is in poor condition and needs several major repairs, cash home buyers in Lincoln can buy your house as-is. You won’t have to pay for any home repairs, renovations, or even cleaning costs.
The cost of selling a house could be expensive if you were to hire a listing agent. Realtor fees cost anywhere from 5-6% of the sale price. Although selling a house by yourself is less expensive, there is still a chance you’ll pay the buyer’s agent fee (2.5-3%) and still have closing costs to deal with. By selling to a homebuyer, you’ll be able to save on realtor commissions, and closing costs are usually covered too.
How it works: You contact a local home buyer or investor either online or via phone and request a cash offer for your house. Then, they reach out to you to schedule a time to either view the home in person or for you to do a video walk-through. Once they get more information about your home and its condition, they’ll present you with an offer within 24-hours. Once you accept the offer you choose the closing date and when you’d like to move out. It’s that easy.
Con: The main downside of selling to a homebuyer is that you may not receive top dollar for your home. Homebuyers typically pay below market value, which could be lower than what you expected. Still, the tradeoff is selling quickly, avoiding any potential hassles, and saving several thousands of dollars in house selling expenses like closing costs and realtor commissions.
While there can be some drawbacks to paying for the buyer’s closing costs- such as risking a low appraisal or netting less for your home sale- agreeing to pay for closing costs may have an upside. However, using a home buyer can help you avoid the high costs of selling your house on your own and provide a buyer who will close quickly without a major hassle.
When you’re stuck between wanting to get top dollar for your house or needing it off the market ASAP, accepting a cash offer from Element Homebuyers can provide a fast home sale.
When you’re selling a house in Nebraska, it’s important to work with an experienced real estate professional who can help you avoid missteps that could end up costing you money or time. Contact our team at Element Homebuyers for more information on how our home buying process works!