How Much Are Closing Costs & Who Pays Them?

Buyers & Sellers Can Cover Closing Costs. Here’s Why & What They Usually Pay.

Closing costs are part of any home sale, covering several fees and expenses associated with the purchase of a house. Easy to overlook and different for every transaction, closing costs can be:

1. Shared by buyers and sellers, with each party paying for the portion associated with their side of the transaction
   
   
2. Used as leverage in negotiations, with either party agreeing to cover more of the closing costs in exchange for some other term, like certain escrow or pricing terms
   
   
3. Variable, with geographic location, the type of mortgage involved, and other factors impacting how much they cost

While closing costs can be a complicated aspect of buying or selling a home, here’s a simplified look at what these costs tend to include and who typically covers each fee.

Average Closing Costs for Buyers versus Sellers

If buyers and sellers are going to share some portion of the closing costs, generally:

• Buyers’ closing costs will be about 3 to 6% of the home’s sale price. Buyers may choose to cover closing costs out of pocket or, in some cases, fold them into their mortgage.
  
  
• Sellers’s closing costs will be about 6 to 10% of the home’s sale price. These fees are usually taken out of the proceeds of the sale (by an institution facilitating the transaction) before they are handed over to the seller.

Keep in mind that every transaction is different and buyers or sellers may agree to cover some or all of the other party’s closing costs to move a deal forward.

6 Expenses Typically Included in Closing Costs

When you hear the phrase “closing costs” as a home seller or buyer, here’s what that really means what you may be responsible for covering:

1. Loan fees: This can include the costs associated with loan origination, processing, and underwriting, like application fees and credit report fees. Buyers tend to cover these mortgage-related costs.
   
   
2. Appraisal, inspection, and survey fees: Used to assess the value, condition, and area of a property, appraisals, home inspections, and land surveys can all come into play during the closing process. The fees for each of these assessments can be covered by either buyers or sellers, depending on the negotiation process. That said, buyers tend to be responsible for home inspection costs, unless it’s a buyer’s market and sellers have agreed to cover these costs.
   
   
3. Title insurance: Varying by transaction, title insurance is usually about 1% of a home’s purchase price.
   
   
4. Private mortgage insurance (PMI): If buyers put less than 20% down on a house, their lender will usually require them to get PMI.
   
   
5. Homeowners insurance: One year of this coverage may be required at closing, with buyers traditionally covering this cost.
   
   
6. Legal fees: If buyers or sellers had legal counsel during the transaction, like for contract reviews, those attorney fees would be part of closing costs.

How to Lower Closing Costs (as a Buyer or Seller)

Whether you’re buying or selling a home in Texas, there are ways to reduce closing costs, including:

1. Making certain concessions in the sale in exchange for the other party covering closing costs
   
   
2. Shopping for different mortgage loan options that come with lower fees or that let you fold closing costs into the loan (and future payments)
   
   
3. Exploring closing cost assistance programs, which may be available for certain qualifying first-time homebuyers
   
   
4. Working with an experienced Realtor® during negotiations to try to work out a better deal that, ideally, has the other party covering some or all of the closing costs

Buying or Selling a Home in Texas? Work with 5-Star Realtors® & Get CASH BACK at Closing

No matter when you’re buying or selling a home in Texas, you can get experienced help and cash back at closing when you work with the 5-star Realtors® at New Home Gurus of Gurus Realty.

We can guide you through the process, helping you with offers, negotiations, and every aspect of closing. Plus, we’ll split our commission with you at closing.

Homebuyers and sellers who work with New Home Gurus can get back an average of $4,500 to $12,000 at closing.

How Much Cash Can You Get after Closing?

Call (281) 668-8124 or Contact Us to Find Out Now

We are standing by, ready to answer your questions and explain the details of our commission-sharing program.