Who Pays Closing Costs When Buying or Selling a Home?

by Erin Fernschild 06/20/2019

The process of closing on a home can seem lengthy and complex if it’s your first time buying or selling a house. There are several costs and fees required to close on a home, and while it’s up to the individuals to decide who covers what costs, there are some conventions to follow.

In this article, we’re going to talk about closing costs for selling a house and signing on a mortgage. We’ll discuss who pays what, and whether there is room for negotiation within the various fees and expenses.

But first, let’s talk a little bit about what closing costs are and what to expect when you start the process of buying or selling a home.

Closing costs, simplified

If you’re just now entering the real estate market, the good news is you can often estimate your closing costs based on the value of the property in question. You can ask your real estate agent relatively early on in the process for a ballpark figure of your costs.

Closing costs will vary depending on the circumstances of your sale and the area you live in. In some cases, closing costs can be bundled into your mortgage, such as in “No Closing Cost Mortgages.” However, avoiding having to deal with closing costs often comes at the expense of a slightly higher interest rate.

If you are planning to buy a house and have recently applied for a mortgage, laws require that your lender sends you an estimate of your closing costs within a few days of your application.

Now that we know how closing costs work, let’s take a look at who plays what.

Buyer closing costs

In terms of the sheer number of closing costs, buyers tend to have the most to deal with. Fortunately, your real estate agent will help you navigate these costs and simplify the process.

They can range from two to five percent of the cost of the sale price of the home. However, be sure to check with your lender for the closest estimate of your closing costs. It’s a good idea to shop around for mortgage lenders based on interest rates as well as closing costs charged by the lender.

Here are some of the costs you might be asked to pay as a home buyer:

  • Appraisal fees

  • Attorney fees

  • Origination fees

  • Prepaid interest or discount points

  • Home inspection fee

  • Insurance and Escrow deposits

  • Recording fees

  • Underwriting fees

Seller Closing Costs

While the seller pays a larger amount of closing costs, sellers still have obligations at closing that can be just as expensive. The biggest expense for sellers is to pay the real estate commission. Commission usually falls in the vicinity of 6% of the sale price of the home. This covers the commission of both the seller’s and the buyer’s real estate agents. 


The main takeaway? Buyers and sellers both share the burden of closing costs. While the buyer has more expenses to take care of, the seller pays for the largest costs.

About the Author
Author

Erin Fernschild

 With an undergraduate degree in International Marketing from William Paterson University, and a wealth of business experience, Erin brings a unique set of knowledge and skills to both buyers and sellers. From helping buyers purchase their perfect home to maximizing a seller’s return, Erin combines drive, creativity, and attention to detail to ensure that each transaction is a success.

In 2016, Erin obtained her real estate license and joined the RealtyQuest team at Kinard Realty Group. Prior to joining Kinard Realty Group, Erin enjoyed a successful career in finance at powerhouse companies including Deutsche Bank, Bear Stearns, and Credit Suisse. In a variety of sales and marketing roles at those companies, she handled a broad range of responsibilities, including business development, new product development, and marketing for these businesses and products.

She is a great listener and communicator and knows how to tailor each transaction with the least amount of difficulties to fully meet her clients’ needs. She is a natural people person who will work tirelessly on her client’s behalf.

A New York City transplant, Erin loves everything about Fairfield and New Haven County. She is warm and energetic, and her enthusiasm for this area is contagious. Erin is also very active in the Stratford Community, serving as a Volunteer for St. James School, Stratford CT, Member of the Lordship Improvement Association, and Active Parishioner at Our Lady of Peace, Lordship CT.

When not working on real estate, Erin loves spending time with her husband and two young children and enjoys skiing, running, boating, Barre, Peloton, restaurants and friends.

Her friendly style, tenacity, and technological abilities provide her clients with a competitive edge in challenging markets.