THE ULTIMATE LBI BUYER’S GUIDE

Overview

There are different costs associated with buyers and sellers in the LBI real estate market, and it is important to understand these costs before entering into a contract. Once you have selected the right house to buy, or if you are selling and have found a buyer, you must consider the additional fees associated with your transaction on Long Beach Island NJ. Closing costs will vary greatly depending on the deal and the individual, but the information below should help give you a general outline of what to expect. Note that while I estimate the cost associated with each line item, the actual prices will vary depending on market conditions and whom you decide to hire.

LBI Real Estate Attorney

An attorney is not required to complete a transaction in the LBI real estate market, but it is recommended. An attorney will review the contract with you and protect your rights in the transaction. Typically, both sides of the transaction will hire an attorney, and they will communicate directly with one another. Typical Closing Costs $1,500-$3,000.

Home Inspection

A home inspection in the LBI real estate market will help uncover a house's hidden defects and help home buyers familiarize themselves with the home. Home inspections are especially important after Hurricane Sandy as they can reveal facts about the storm's impact on a home. Even brand-new homes should have a home inspection to investigate any potential issues. In fact, a new home is perhaps the most important type of home to inspect. Many buyers falsely assume that the inspection may be skipped since the home is new. That is not the case. Some of the most problematic inspections can be found on brand-new homes!  Note the home inspection is often paid ahead of closing and is not put on the fiunal closing paperwork. Typical Closing Costs $500-$2,000.

Survey and Flood Elevation Certificate

Most townships on Long Beach Island will require a new survey and flood elevation certificate before issuing the resale Certificate of Occupancy. These documents will also be useful when looking for a flood insurance quote or making any property improvements. A survey will also help define the boundaries of the property lines and point out any encroachments or issues that may exist. Typical Closing Costs $1,200-$1,500.

Mortgage Fees and Appraisal Fees
Lender fees are especially difficult to anticipate and will vary greatly depending on the type of mortgage, the lending institution, and the interest rate. I have included a very rough number, but it is best to speak with your lender to obtain exact pricing. In addition to the standard lender fees like the application and appraisal, there can be additional fees for document preparation, title insurance, mortgage points to lower the interest rate, and a host of other variables. Lender Fees: $1,200-$5,000. Appraisal Fees: $500-$1,500.

Filings with the State and Local Government

Fees imposed on the sale of a property will depend on the town and the style of the home purchased. Common fees will include the recording of the deed, changing water and sewer service to your name, deed restrictions filed with the county, and other similar miscellaneous expenses. Typical Closing Costs $500-$600.

Title Insurance

Title insurance is used to protect the title of a home from defects such as past judgments, liens, or other defects on the clear title of a home by searching all available past records. The cost of title insurance will vary depending on the price of a home. There are different policy options, and all buyers in the LBI real estate market should families themselves with the different coverages before making a decision. Title insurance will be one of the most expense parts of the closing costs. Typical Closing Costs: A rough estimate to use is 0.5% of the purchase price and/or the mortgage amount to cover all fees.

Utility Proration

Utility proration reimburses the seller for expenses they have prepaid but will not have owned the home. Common examples are property taxes and water/sewer charges. These expenses will be broken down to a per day cost of each line item and charged to either the buyer or the seller based on the closing date. Note that this is not a "closing cost", but rather an ownership cost paid at closing. Typical Closing Costs $100-$2,000 depending on the time of month and what has been paid.

Mansion Tax or Millionaires Tax

If you purchase a property over $1,000,000 the State of New Jersey will impose the "mansion tax". This is a tax paid to the state by the buyer, equal to 1% of the TOTAL purchase price. Example: If the sale price of a single family home is $1,200,000 the mansion tax due is $12,000. Typical Closing Costs: 1% of the Purchase Price.

Selling Real Estate on Long Beach Island New Jersey

Since many buyers in the LBI real estate market also sell a home, it is helpful for home buyers to know what to expect on that end of the transaction. Below is a rough outline of what a seller can expect to pay in the LBI real estate market. If you have a house to sell on Long Beach Island, you can request a market evaluation of your home or view my detailed page regarding the seller's closing costs in the LBI real estate market.

As is true when buying LBI real estate, the closing costs will vary when you plan to sell real estate on Long Beach Island. If you are selling a property in the LBI real estate market, there are a few expenses you should count on. These include:

• Realtor's Commission

• NJ Transfer Tax

• Out of State Resident Tax (if your primary home is not in New Jersey)

• Certificate of Occupancy and Filing Fees

Real estate commissions are negotiable in the State of New Jersey, but most will range between 4% and 5%. The New Jersey Transfer Tax is a sliding scale based on the total sale price of the property. I advise my clients to anticipate paying about 1% of their sale price to the State of New Jersey when selling LBI real estate. If you are a senior citizen, the transfer tax is considerably lower. If you are not a resident of New Jersey, meaning your primary residence is outside the state, an additional 2% tax is collected at closing based on the sale price. The out-of-state tax will often be refunded when you file your taxes, but this is something to verify with your accountant. Sellers typically will provide the Certificate of Occupancy, which is around $150-$200, and have some county and state filing fees, costing around $200-$500 total.