Guide to Closing Costs

Closing Costs

When a buyer decides to buy a home, one of the most common questions is who pays for what, and what are closing costs? To put it simply, once you get an accepted contract and enter into escrow, closing costs are what the buyer and the seller will pay as part of the transaction. Some of the fees are negotiable. Both the buyer and seller have costs associated with them that are unique to each other.

Seller Closing Costs

Typically when you choose to sell a home with a real estate agent, the seller can expect to pay the realtors commission. The seller will be paying the agent selling their home, along with a portion of that going to the real estate agent that brings the buyer to purchase the home. When you bought your home, it more than likely happened this way and you didn’t have to pay anything to the realtor that took you to the home. There’s more to closing costs to sellers than commission however.

Closing Costs Not Associated With Commission

There are document preparation fees for the deed and documentary transfer taxes, depending on the city and county. There could even be fees associated with repairs for the home that are paid through escrow that count towards closing costs. These can include termite or wood destroying fungus/rot work or any miscellaneous home repairs. You might even be open to helping the buyer pay for part of a home warranty. There are seller escrow fees (don’t worry, there are buyer escrow fees they cover as well), and homeowners transfer fees. This might sound like a lot, but don’t worry, if you have a good agent or team, they will go over this with you before you list and will give ball park costs, that are typical of your city or county.

Buyer Closing Costs

Buyer closing costs are fees that are typically paid by the buyer. Occasionally some or all of these fees can be covered by the seller. However, in thriving sellers markets, this is very hard and very unlikely to happen because the market is so competitive. Typical buyer closing costs include title insurance premiums in the Lenders policy. The buyers Lender will typically go over this with the buyer. The buyer also has their half of the escrow fees. There are also possible charges for document preparation and notary fees for signing lending documents. There are also recording charges for all of the documents to be put in the buyers’ name. There will also be a tax proration from the date of property acquisition. There are also inspection fees that are associated with buyer costs. The most common of these are an appraisal and a home inspection. The buyer will also need to purchase home insurance that includes a fire insurance.

In Closing

This is just a general over view of some closing costs that could affect you. If you are interested in knowing more, feel free to reach out to the John & JP Real Estate Team if you are interested in selling your home and finding out more about the potential closing cost amount. Or if you are looking to buy a home and don’t know how to get started or how to choose a reputable Lender, feel free to reach out to us. We would love to hear from you!