Closing Costs and Who Pays Them?

Costs of closing are costs acquired upon closing the deal of a real estate transaction. These costs are necessary for closing the sale transaction. It is necessary to figure out who pays for the fees and services and when these amounts should be paid. However, there are some costs associated with the closing that are not paid during closing. There are instances when surveyors and inspectors want to be paid immediately for their services. It is necessary to research on the area you are planning to purchase or sell a home and be knowledgeable about laws and standards of practice in the area. While requirements could differ in each state or city, it is important to be aware that you have to pay ahead so you can prepare to cover the costs. Usually the most expensive closing cost is the loan origination fee. Lenders charge a fee to a loan.

In general, who pays what will depend on the relative bargaining strength of both parties. In a Seller Assist Program, the seller is in a stronger position and should take advantage of it because closings costs could often run to thousands of dollars. While who pays what costs of closing is always negotiable, it is also fair to say that these costs are usually paid in accordance with local custom.

When figuring out who, what, when and how much, the one thing that you should not forget is they are negotiable. Closing costs differ from state to state. Closing costs like title insurance are based usually on local custom where the home is located. Home buyers typically pay closing costs such as charged fees for obtaining mortgage, homeowner’s insurance, inspection fees, transfer taxes, escrow fees, title insurance and attorney’s fees. If you are not sure, a mortgage broker could help you which fees are normally paid by the buyer in your state and how much these costs.

Furthermore, buyers are also required to pay other closing costs like document preparation, own notary fees, prorated property tax, prorated Homeowner’s Association dues, new loan charges, assumption or change of records for taking over of existing loan, home inspection, home warranty, fire insurance premium, city or county conveyance tax, assessments and bonds and special delivery and courier fees.

A seller’s closing costs include real estate commission, payoff fees, title insurance, cash payments in lieu of home repairs, termite repairs, all or a portion of the escrow fees or transfer taxes, attorney’s fees if applicable and other fees negotiated during the transaction. Also included in the seller’s cost include document transfer tax, homeowner association transfer fees, city or county conveyance tax, home warranty, judgments or tax liens against the seller, own notary fees, special delivery and courier fees.

In general, both sellers and buyers pay costs and fees. As mentioned above, there are some closing costs that are paid by the seller or the buyer alone and there are also fees that they could split. Some closings costs are paid automatically by each party based on the city or state where the transaction takes place.

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