In any real estate transaction, there are always some vendors who need to be paid—lawyers, title companies, and real estate agents, just to name a few. These expenses are lumped under the category of closing costs—so named because they are often paid in one bulk sum at the closing itself. As you prepare for your own real estate transaction, it’s important to work these costs into your budget.
So how much are closing costs? Well, it just depends. It’s always a percentage of the total home value, but the actual percentage could be anywhere from two to seven percent. And while the closing costs are usually split between buyer and seller, it’s the buyer who usually pays more (three or four percent, compared with just one to three percent paid by the seller).
We might also note that some closing costs are technically paid before closing—like the home inspection fees—but most you’ll be paying when you actually go to transfer the keys and sign on the dotted line.
Closing Costs for Buyers
The reason closing costs are more for buyers is that most of them have to do with the mortgage; as such, buyers who pay in cash will have considerably fewer fees to contend with, though there will still be a handful.
For those who do take out a mortgage, closing costs can include all of the following:
- Loan origination fees, for processing your loan application paperwork
- Charges for running your credit report
- Fees for the underwriter
- Fees for your home appraisal
- Fees for the home inspection
- A fee for the title search
Closing Costs for Sellers
Meanwhile, sellers can expect to pony up for a few fees and expenses themselves. Some of these costs might include:
- A closing fee paid to the attorney or title company when everyone meets the sign off on the closing of the sale
- Taxes on the home sale
- A fee for the attorney, if you choose to use one
- A fee to transfer the title to the new owner
Also note that the seller is usually the one who pays most of the agents’ commission fees, which could be as high as four to seven percent of the home’s total value—so while this usually amounts to a little bit less than what the buyer pays, it’s still a solid expense, and you’ll want to work it into your budget.
Closing Costs Are Variable
Of course, closing costs can vary significantly, largely due to the different requirements within the state and municipality of the sale. That’s one reason among many why it is important to work with an experienced local agent, who can advise you on closing costs.
For those looking to buy or sell in North Carolina, the Minges Cline team can provide just that level of expertise. We have roots in the area, and a commitment to excellent service for each and every client. Contact us to learn more!