Have you ever thought about who pays closing costs in real estate transactions? While most people focus on the sale price of a home, you can’t forget about closing costs. Whether you are buying or selling, these costs can make a difference.
Do you want to know more about who pays closing costs? Read on for more information!
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All About Who Pays Closing Costs
The first point is who pays the closing costs on a real estate transaction. Most transactions involve both parties paying some of the closing costs. For example, buyers usually pay for appraisals, title insurance, credit reporting, etc. On the other side, sellers might pay commissions, property taxes, and title transfer fees.
However, who pays which fee may depend on an array of factors. There is also the potential for the parties to negotiate closing costs.
Now that you know each party might pay different fees, let’s take a closer look at closing costs.
How Much to Pay in Closing Costs
The next question most people have is how much they’ll pay in closing costs. Closing costs vary depending on the transaction. Factors like the home’s sale price, bank fees, and administrative costs can have an impact.
Most buyers should expect to pay between 3-6% of the total sale price in closing costs. Sellers should expect closing costs to run 5-10% of the home’s sale price. Seller closing costs tend to be higher because they usually pay the real estate commission.
Paying Closing Costs
How do buyers and sellers pay the closing costs of the transaction? Sellers typically pay their closing costs out of the sale proceeds. Buyers pay their closing costs out-of-pocket. That means they need to account for these fees in the home’s overall cost.
Negotiating Closing Costs
Closing costs can be open for negotiation. Adding or subtracting money from the sale price to account for different closing costs is also possible. The buyer might be able to negotiate fees with their lender to reduce some closing costs. Sellers might also be able to negotiate the real estate agent’s commission. The parties can also shop around for lenders and agents that offer lower fees.
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