Who pays closing costs?

Javier, the short answer is that both sides pay closing costs, and the split is not fixed. Buyers typically pay more of them than sellers do, but the useful way to think about this is not "who pays." It is which bucket a given cost falls into, because each bucket gets attacked differently. Amanda, Brian and Jennifer already covered the commission side, and Brian is right that it is negotiable, so I will not re-plow that ground. Here is the framework instead. Bucket one is negotiable between you and the seller. This is where seller concessions live, and it is where first time buyers leave the most money on the table simply by not asking. In a contract you can ask the seller to pay a portion of your closing costs. What you cannot do is ask for an unlimited amount, because your loan program caps it. On a conventional loan the cap is 3 percent of the price if you put down less than 10 percent, 6 percent if you put down 10 to just under 25 percent, and 9 percent at 25 percent down or more. FHA caps seller concessions at 6 percent of the lesser of price or appraised value. VA generally allows up to 4 percent in seller concessions, with ordinary closing costs treated separately. Know your cap before you write an offer, because asking for more than the program allows just gets the excess struck. Bucket two is shoppable. These are real vendors competing for your business, and most buyers never realize they get to choose. When your lender issues your Loan Estimate, look at Section C, headed Services You Can Shop For. If a lender lets you shop, it must hand you a written list of providers along with that Loan Estimate, and that list has to say in plain language that you are not required to use anyone on it. Title, escrow and closing services usually sit here. Get two or three quotes. Also compare Section A lender fees across two or three lenders, because origination charges vary more than rates do and they are pure profit margin, not a cost of goods. Bucket three is fixed by government and there is nothing to negotiate. Recording fees, any transfer tax, prorated property taxes. Here is the good news for you in San Antonio: Texas has no statewide real estate transfer tax at all. In a lot of states that line item alone runs into the thousands. The tradeoff is that Texas property taxes run high, and your monthly payment will reflect that, so when you set your budget, build it around the full payment including taxes and insurance rather than around principal and interest. One Texas custom worth knowing. Across most of the state, including Bexar County, the seller customarily pays for the owner's title policy and the buyer pays for the lender's policy at the simultaneous issue rate. That is convention, not law, so it is negotiable and it does get traded in a competitive market. Do not assume it, ask your agent to confirm what the local norm is on the specific deal. Two more practical notes. Prepaids and escrow reserves are not really fees, they are your own money moving forward in time. Your first year of homeowners insurance, several months of property taxes into an escrow account, and prepaid interest to the end of the month. They inflate your cash to close and people panic at that number. They are not a cost in the same sense that a lender fee is. And ask your loan officer about the down payment assistance and first time buyer programs operating in San Antonio, since several of them help with closing costs specifically, and the eligibility rules change often enough that you want a current answer, not an internet one. My name is Zoltan Peresztegi, and I work in Los Angeles, the South Bay and on the Palos Verdes Peninsula, so I am not your local agent in San Antonio and would be no use to you on a Bexar County contract. If you want a first time buyer specialist there who will actually walk your Loan Estimate line by line with you, message me and I will make a referral. Either way, congratulations on doing the homework before you shop instead of after. Zoltan

Javier, both buyers and sellers pay closing costs in a real estate transaction. Keith Jean-Pierre Managing Principal The Dapper Agents Real Estate Operations in ALL 50 States

Both buyers and sellers have closing costs. Typically buyers pay lender fees, inspections, title insurance in some markets, and prepaid items like taxes and insurance. Sellers usually pay real estate commission and certain title or municipal fees. The split can vary by state and is sometimes negotiated in the contract.

Hello Javier. This answer can change locally. I would contact a few local Realtors and see who you feel comfortable with. Ask friends and family. Do your research on the Realtor. How long have they been in business? Do they know the area you are looking in? Are they full time or part time? Are they good with communication? Don’t sign a buyer contract until you are comfortable with your choice. A local Realtor can explain the entire process to you at no cost. They can also help you find a local lender who can further explain the financial part of the sale. Closing costs and commissions vary by location and also the current real estate market. Here in PA we aren’t seeing sellers paying buyer’s closing costs however when the market shifts we do. Also, here in PA the seller typically pays the sales commission.

In my state (Georgia) closing costs are negotiable, so it depends on other aspects of the offer. I.e How competitive you want to be, purchase price, terms etc. Commission is typically paid by the Seller.