One mistake that is made by both Buyers and Sellers of real estate is to underestimate closing costs. These must be taken into account - along with your overall budget - BEFORE selling or purchasing a home.
Demystifying Closing Costs: What Every Buyer and Seller Needs to Know
Navigating a real estate transaction is an exciting milestone, but the final financial stretch can leave both buyers and sellers scratching their heads. Enter closing costs: the collection of fees, taxes, and administrative expenses required to finalize a property sale.
Whether you are purchasing your first home or selling a property, understanding who pays what ensures there are no surprises when you sign on the dotted line.
What Are Closing Costs?
Closing costs cover the services required to transfer ownership of a property legally and securely. They include everything from lender processing fees and title insurance to state transfer taxes and real estate commissions.
Closing Costs at a Glance
| Role | Typical Percentage | Estimated Cost ($400k Home) | Paid Out Of... |
| Buyer | 2% – 5% of loan amount | $8,000 – $20,000 | Out-of-pocket cash at closing |
| Seller | 6% – 10% of sale price | $24,000 – $40,000 | Deducted from home sale proceeds |
