Who Pays Closing Costs?
Both sides pay, but not the same costs.
Buyers typically pay 2 to 5 percent of the price in closing costs covering lender fees, appraisal, title, and recording, while sellers typically pay 1 to 3 percent covering transfer taxes, their title policy, and agent commissions on top. Sellers can also contribute to buyer costs through concessions, usually capped at 3 to 6 percent of the price depending on the loan program.
The standard split
Buyers pay the loan-related costs: origination, appraisal, credit report, prepaid interest and insurance, title search and lender's title policy, and recording fees. On a $350,000 purchase with 10 percent down, that estimates around $5,400.
Sellers pay their own side: transfer taxes where they exist, the owner's title policy in many states, attorney or settlement fees, and real estate commissions, which are the largest seller cost by far.
Seller concessions
A seller concession is the seller agreeing to pay some of the buyer's closing costs, credited at settlement. Loan programs cap them: often 3 percent for higher down payments and up to 6 percent for lower ones on conventional loans, 6 percent on FHA and VA.
Concessions are negotiated like price. In a buyer's market they are common; in a bidding war, asking for them can weaken your offer.
Negotiating the split
Everything is negotiable until the contract is signed. Buyers can ask for concessions instead of a price cut when the appraisal is tight, since concessions do not change the appraised value math.
Lender credits are the other lever: accept a slightly higher rate in exchange for the lender covering some costs. Run the break-even to see if it beats paying cash at closing.
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Who pays closing costs questions
Do buyers or sellers pay closing costs?
Both sides pay their own closing costs. Buyers typically pay 2 to 5 percent of the price for lender fees, appraisal, title, and recording. Sellers typically pay 1 to 3 percent for transfer taxes and settlement fees, plus agent commissions on top.
Can the seller pay my closing costs?
Yes. Sellers can contribute toward buyer closing costs as a concession in the purchase contract. Caps depend on the loan: conventional often 3 to 6 percent based on down payment, FHA and VA up to 6 percent.
What are typical seller closing costs?
Sellers usually pay transfer taxes, their share of title and settlement fees, and any outstanding liens or prorations, totaling roughly 1 to 3 percent, plus real estate commissions, historically the largest seller expense.