Closing Costs on a House: The Difference Between Buyers and Sellers

Closing Costs on a House: The Difference Between Buyers and Sellers

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Closing CostsClosing costs are one set of expenses that first-time buyers do not expect.  Besides finding a down payment, it is important to save for closing costs that will be charged to the buyer at the end of the process.  Sellers also have closing costs and tend to pay more than buyers.

The Seller’s Portion

A seller will need to pay the real estate commission.  This price can vary sale to sale as it is based on the sale price of the home.  

The higher the sale price the more will be paid in commission.  It can be a large chunk out of the seller’s pocket so it is something they will need to plan for.

There are other costs in closing.  If there is a balance left on their property taxes this must be paid out before closing.  They must pay any back due or pro-rated fees as well. For example, this includes any homeowner’s association dues that were billed for when they still lived in the home.  

The Buyer’s Portion

The buyer does not have commission to pay on the home.  Instead, their costs come from the loan.

There are many items that buyers must pay for the loan to go through.  There is insurance and interest to pay. The appraisal fee and the origination fee is also included.  Consider the tax service, pulling of a credit report, a processing fee, recording fee, notary fee, and finally title insurance.

All of these items can vary slightly with each loan.  There should be a document provided that has all of these costs explained in detail.  The report may be confusing so it is easier for a buyer to talk to their lender about each charge.

Saving Up

Before closing day, both the seller and buyer should receive paperwork that tells them their estimated closing costs.  While this number is not always accurate, it is usually very close. These costs are greatly based on the sale price of the home so it is easy for a seller to know what their portion will be.  Most real estate agents can give a buyer or seller an idea of what their costs will be before closing.

This is Negotiable

There is no saying that these costs are not negotiable.  The lender or real estate agent will get their payment. However, the buyer and seller can decide who will pay what.  

During negotiations, there can be a percentage negotiated where one party pays a portion of the other parties fees.  It can be a helpful negotiation tool.

No one wants to pay closing costs.  It is a large amount of money that they would rather hold on to.  Offering to pay more can sway a person’s decision on whether to sell or buy the home.  If negotiations are at a standstill this can save the deal from falling through.

Closing costs are an inevitable part of buying or selling a home.  They can be costly and must be paid out of the pocket of the seller or buyer.  If this cost was unexpected it can be a difficult amount of money to obtain in a short amount of time.  So this can be negotiated to continue with the deal if needed.

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