Buying or selling a home is a euphoric experience for both of the parties involved. However, this euphoria can cool when you get to the issue of who pays closing costs.
When looking to buy or sell a home, every person eventually arrives at the question of who pays closing costs on the transaction. To put it simply, both buyers and sellers typically pay some of the closing costs. However, the exact amounts paid can vary significantly from area to area and depending on what agreements the buyers and sellers come to in the process of writing and agreeing to an offer/counteroffer.
As these costs frequently change from state to state and often city to city, it is important to research the area you are looking to buy or sell in and be knowledgeable regarding any laws and standards of practice for the area. By knowing what you will have to pay ahead of time, you can be prepared to cover these costs.
Below are some examples of what buyers and sellers generally have to pay in Southern California:
Buyers typically pay the following closing costs: fees charged for obtaining a mortgage; inspection fees; homeowner's insurance (must be prepaid for one year at closing); lender’s title insurance (if the Buyer obtains a loan) and escrow fees.
Sellers' closing costs typically include: loan payoff fees; the real estate; owner’s title insurance (to protect the Buyer from any pre-existing liens or encumbrances on the property); termite repairs; cash payments in lieu of repairs to the property; home warranty; all or part of transfer taxes and escrow fees.
In addition to the fees described above, there are many other charges that may apply to a particular transaction and local customs will dictate which party is expected to pay for these items.
