There was a time when buying a house without actually setting foot in it was a risky bet suited only for Vegas high-roller types. Today, thanks to advancements in technology and the effects of a pandemic, people with less tolerance for risk are more willing to go all-in on virtual home shopping.
Many first-time homebuyers don’t realize that they will be responsible for certain expenses that are due at closing. In addition to a down payment, closing costs are often divided between the seller and buyer. These expenses are a normal part of the home buying process, some of which are traditionally placed under the responsibility of the seller or buyer. Let’s define several standard closing costs and identify which party is typically responsible for this expense.
Common Closing Costs Explained
Those buying a house should anticipate paying an additional two to five percent of a home’s selling price in closing costs. Those selling a property should anticipate paying roughly six to ten percent of the home’s selling price in closing costs.
Common closing costs buyers take on when buying a house include:
- Loan Origination Fees: These costs are charged by the mortgage lender or financial institution and cover the charges associated with creating the loan applications.
- Notary Fees: All fees charged by a licensed notary public.
- Appraisal Costs: The fee charged for a licensed appraiser to appraise the property.
- Home Inspection Fees: The fee charged for a licensed home inspector to professionally inspect the home.
- Credit Report Fees: Any fees associated with the running of your credit report through your mortgage lender.
- Land Survey Fees: Any fees associated with a land survey conducted by a licensed surveyor.
- Deed Recording Fees: This cost covers the fees associated when the deed transfer is recorded in public records.
Common closing costs sellers take on when selling property include:
- Seller Costs: These costs cover payments made to all real estate agents or brokers conducting the transaction.
- Attorney Fees: Fees charged for legal services rendered by the seller.
- Unpaid HOA Fees: Any homeowners association fees that the seller still owes prior to the home sale.
- Property Liens: Any liens or judgments against the property will typically be paid off by the seller.
- Prorated Property Taxes: Any property taxes accrued up until the home sale.
- Title Insurance Fees: These fees are typically the buyer’s insurance premium.
- Transfer Taxes: These fees are charged by the local government to transfer the property title from seller to buyer.
- Loan Payoff Costs: Any interest or prepayment penalty fees the seller incurs when paying off their mortgage loan at the time of the sale.
In some situations, buyers may be able to negotiate with sellers to relieve themselves of various closing costs. For example, sellers who desire a fast sale may be willing to cover certain costs or buyers may be willing to accept a lower counteroffer if the seller agrees to absorb some of these expenses. If you’re interested in buying a house, we suggest that all buyers anticipate these additional costs and save accordingly.
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CBR, SRES - Licensed Real Estate Salesperson
Phone: 516.849.5895 | [email protected]
As an experienced professional Neil will do the leg work, keeping you up-to-date with new listings and the various market conditions that may impact the home purchase process. Sellers can also benefit from his skills in finance, negotiation, contractual agreements, and RE marketing. Call today and allow Neil to guide you through the complexities of buying or selling your home, eliminating hassles, and stress.
Member of:
National Association of Realtors
Long Island Board of Realtors
Multiple listing service of long Island
New York State Association of Realtors