What closing costs should I expect when buying a home in Naples?

Closing costs are the part of the purchase price that almost no one budgets for until the settlement statement shows up. The good news is that in Florida the allocation is predictable, and in Collier County there are a few local customs that differ from the rest of the state. Understanding them before you make an offer keeps the surprise out of the closing.

The Rough Range

For a financed purchase in Florida, closing costs typically run 2 to 5 percent of the purchase price. That includes the lender's fees, the appraisal, title insurance, taxes, and recording. A cash buyer, with no mortgage work involved, typically lands closer to 1 to 2 percent. On a $1 million home that is the difference between roughly $15,000 and $40,000 depending on your loan, so it is not pocket change.

Who Pays What in Florida

Florida spreads the closing costs between buyer and seller, and the split is set by local custom and the purchase contract. The seller customarily pays the documentary stamp tax on the deed, the state's closest thing to a transfer tax, at 70 cents per $100 of the sale price. The buyer pays the doc stamp on the mortgage note at 35 cents per $100 of the loan, plus an intangible tax of 2 mills on the loan balance, along with the lender fees, the appraisal, and the recording costs.

The Collier County Difference: Title Insurance

Here is the local wrinkle that surprises out-of-state buyers. In most of Florida the seller pays for the owner's title insurance policy, but Collier County is one of the minority of buyer-pays counties, along with Miami-Dade and Sarasota. In Naples the buyer customarily pays for the owner's title policy, and the buyer usually selects the title and closing agent. The lender's title policy is paid by the buyer everywhere, and it is required with a mortgage. Title premiums in Florida are set by the state and run about $5.75 per $1,000 on the first $100,000 and $5.00 per $1,000 above that.

What the Number Actually Includes

Beyond title and taxes, expect the lender's origination and underwriting fees, an appraisal, a survey or title search depending on the property, the escrow set-aside for property taxes and insurance, and prorations that divide the year's tax and HOA bills between buyer and seller at closing. The property tax proration can be a meaningful line item in Naples because the bills are large, and the first year's insurance premium you prepay at the table is often one of the biggest checks you write.

Ask for a Closing Estimate Early

You should see a good-faith estimate of these numbers before you sign the purchase contract, not at the settlement table. A lender is required to give you a Loan Estimate within a few days of application, and it spells out the costs. I walk every buyer through the full cost of ownership, not just the price, before we write an offer, because closing costs, insurance, and taxes are all part of whether a property makes sense.