Who has to pay the closing cost?

There is no national answer, and that is the actual answer. Who pays what is decided by your contract, and the starting point for that negotiation is local custom rather than any law. That trips people up constantly, because custom varies not just state to state but sometimes county to county. Who pays for the owner's title insurance policy is the classic example. In some places the seller always covers it, in others the buyer does, and in others it is genuinely split or negotiated every time. Neither side is being unreasonable, they are each working from what is normal where they are. So the first question to ask your agent is simply: what is customary here. Broadly, though, the shape is this. The buyer typically carries the costs of getting the loan and of taking ownership: lender and origination fees, the appraisal, credit report, title search and lender's title insurance, recording, and prepaids, meaning the first year of homeowners insurance plus several months of taxes and insurance to fund the escrow account. The seller typically carries the costs of transferring the property and of selling it: the real estate commission, transfer taxes or documentary stamps where they apply, their loan payoff, prorated property taxes up to closing, and often the owner's title policy depending on local custom. Now the parts that are actually negotiable in the offer, which is where this gets useful. Seller concessions. A buyer can ask the seller to contribute toward the buyer's closing costs, and it is very common, especially for first-time buyers who have the down payment but are thin on cash after it. Important limit: how much a seller may contribute is capped, and the cap differs by loan program and by your down payment. Ask your lender for your specific number before you write it into an offer, because exceeding it does not get you extra help, it just gets the excess disallowed. VA loans have their own rules, and nobody has mentioned them here. There are certain fees a veteran buyer is not permitted to be charged. In practice those land on the seller or the lender instead. If you are using a VA loan, tell your agent early so the offer is structured properly, and if you are a seller receiving a VA offer, have your agent explain what you are agreeing to. Two practical notes. Buyers: get a Loan Estimate. It is a standardized federal form listing every fee by name, and it is the only reliable way to compare lenders. Sellers: ask for a net sheet before you accept an offer. A higher price with a large concession request can net you less than a lower price without one, and the only way to see that is to run both. This question is from 2021. The biggest change since is that buyer agent compensation is now negotiated deal by deal rather than published in the MLS, so who pays that is very much part of this conversation now in a way it was not then. I am a real estate professional, not a lender or an attorney. I work in Los Angeles and the South Bay, and I am glad to help you find a good agent wherever you are. Zoltan Peresztegi, Los Angeles and South Bay real estate professional

Both the buyers and seller are responsible for their own closing costs in most instances. Keith Jean-Pierre Managing Principal The Dapper Agents Real Estate Operations in ALL 50 States

Both the buyer and the seller pay closing costs, but they pay different things. The seller typically pays the real estate agent commissions, title insurance for the buyer in most markets, documentary stamps or transfer taxes depending on the state, any outstanding mortgage payoff, prorated property taxes, and any negotiated credits or repairs. Seller closing costs usually total 7 to 10 percent of the sale price. The buyer typically pays the loan origination fee, appraisal fee, credit report fee, title search, lender's title insurance, recording fees, prepaid items like homeowners insurance and property tax escrow, and any points paid to buy down the interest rate. Buyer closing costs usually total 2 to 5 percent of the purchase price. In many transactions, the buyer asks the seller to contribute toward their closing costs as part of the offer. This is called a seller concession and it's common, especially for first-time buyers who are tight on cash. The amount a seller can contribute is limited by the loan type, usually 3 to 6 percent of the purchase price.

Closing costs are not paid by just one party; they are a collection of fees that both the buyer and seller are responsible for according to custom and the purchase contract. On the buyer’s side, closing costs generally include loan origination and underwriting fees, appraisal, credit report, title search and lender’s title insurance, escrow/settlement charges, recording fees and prorated property taxes and homeowners insurance. If the home is in an HOA, buyers may also pay HOA transfer fees or reserves. Sellers typically pay the real estate commissions for both listing and buyer’s agents, the deed transfer tax (if any), their portion of escrow or closing fees, any outstanding property taxes and HOA dues through the closing date, and costs to clear title such as satisfying liens. In some markets sellers also cover the owner’s title policy, while in others that is a buyer expense. Most closing costs are negotiable in the purchase contract. A buyer can request a seller credit toward closing costs in lieu of a price reduction, and local customs sometimes dictate which party covers certain fees. Your real estate agent and lender can provide a detailed estimate of which costs apply in your area and how they can be allocated so you know what to expect before you sign the contract.

Hello Michael, buyers pay closing cost or the lender might be able to cover it also please reach out to me I can answers all your questions - Alfred

Michael, Everything is negotiable. If you don't ask, you don't get.

Closing costs are paid according to the terms of the purchase contract made between the buyer and seller. Usually the buyer pays for most of the closing costs, but there are instances when the seller may have to pay some fees at closing too.