Most often, real estate agents do not pay for closing costs. Although everything is negotiable in real estate, the closing costs usually include the commissions being paid to the real estate agent.
Closing costs are usually paid by both the buyers and sellers. Each paying for different items, but typically coming out to similar amounts.
How Much Are Closing Costs?
Costs differ for every transaction. In the US, the costs that title companies are charging is federally regulated. This means that no matter where you close your home, you will be getting the same deal from the title company.
SmartAsset has a great calculator for estimating closing costs. Feel free to check that out here.
Where Do The Rest of The Fees Come From?
The rest of the costs are coming from the buyer’s lender and other service providers. It is not uncommon to have buyer’s charges from surveyors, inspectors, electricians, or appraisers hired by the lender.
What’s The Actual Dollar Amount?
Generally, closing costs will range between 2% – 6% of the sales price of the property. This is for each party, so taking that into consideration when determining your budget is important.
Speaking with your lender and determining how much should be set aside for closing is a good idea. Out of your money saved up for a down payment, you may need to be setting aside more for closing.
Who Pays What?
They can generally be broken down to the buyer or the seller paying. Some overlap, but not many. We’ll be diving into what each person is paying at closing.
Buyer Costs
This list is not all-encompassing. It does however include many of the common closing costs that a buyer is going to see on their settlement statement/closing disclosure.
- Appraisal Fee
- Loan Origination Fee
- Flood or Insurance Certification Fee
- State Title Policy Guaranty Fund Fee
- Escrow Fee
- Recording Fees
- Assignment Fees (Leases/Rents)
- Affidavit of Non-Homestead
- Power of Attorney
- Home Inspection (if not paid upfront)
Some of the items showing up from service providers such as inspectors are not always on the closing disclosure. If the buyer is paying service providers immediately, they will not be paying for their services at closing.
Seller Costs
Seller costs are typically more straightforward than those of the buyer. It generally comes down to all of the local county’s and state’s requirements for property transfers. You can call any title company in your area and they can give you a rough estimate of what those cost in your area.
For numbers like the lender payoff, you can check with your lender and they will send you an up to date statement of your account. This should include the principal remaining on your mortgage, and help you in calculating your net proceeds from closing based on your sales price.
- Payoff to Lender (Mortgage Balance Remaining)
- County Property Taxes (Prorated)
- Real Estate Commissions
- Attorney Fees (to Title Company)
- State Title Policy Guaranty Fund
- Escrow Fee
- Tax Certificates
- Home Warranty (if applicable)
- Any Home Repairs
Are Closing Costs Negotiable?
Just like everything else in real estate, negotiating closing costs is also possible. Although not very common, agents are doing it every day across the country.
Usually, they are showing up in the form of a seller concession on the closing statement. They are going towards the buyer’s closing costs at the closing table. They are helping buyers get into a home with less cash out of pocket.
Although it can seem daunting, don’t let closing costs deter you from buying or selling a home. Speaking to the experts at your bank and local title company will give you a better idea of what your exact costs will be.
