What are Real Estate Closing Costs?


Closing costs are fees paid at the closing of a real estate transaction. Fees typically include loan, appraisal, and title fees along with payments for your credit report and home inspection.


It’s a good idea to hire third party professionals like Borders and Borders to take care of varying aspects of a real estate transaction because it can be a complicated process and the value of the transaction is so high. These professionals might include banks, brokers attorneys, insurers, and inspectors. All of these must be paid for their services, and payments are usually all taken care of at closing. So, a closing cost is any fee paid at this time that is not included in the final sale price of the property.


No two closings are the same and the closing costs that are accounted for can vary from transaction to transaction, but you can generally expect the amount to about two to seven percent of the final sale price according to the National Association of Realtors.


Does the buyer or seller pay closing costs?

Closing costs consist of expenses for both the buyer and the seller. The breakdown of who pays what can vary depending on the details of the transaction. Usually the buyer pays more. This is because the bulk of closing costs consist of fees related to the mortgage. Sellers usually pay taxes on the home sale and a fee for the title transfer as well as the real estate commission for the agents involved.


What costs are associated with closing on real estate transactions?

Some of the most common closing costs are listed below:

  • Loan origination fee – Lender’s administrative costs for the loan paid by the buyer

  • Loan application fee – Lender’s costs for processing the mortgage application paid by the buyer

  • Cost of Credit Report – Cost from the bank for running a credit report.

  • Attorneys fees – Both buyers and sellers may pay attorneys’ fees for the transaction.

  • Appraisal – The buyer typically pays an appraisal company to assess the fair market value of the home.

  • Home inspection – Cost of inspections for structural integrity, pests, lead-based paint, etc. The buyer typically pays these costs.

  • Underwriting fee – The buyer pays the lender for the costs of assessing creditworthiness.

  • Title search – An attorney should research the property to ensure it has no outstanding claims. The buyer typically pays for this service.

  • Survey fee – The buyer may pay a surveyor to evaluate the property boundaries.

  • Taxes on the home sale – The seller will need to pay taxes on the money received as part of the sale.

  • Tax stamps – The buyer pays taxes on the money borrowed to finance the home.

  • Property Tax – Sometimes the buyer is asked to make the first property tax payment at closing.

  • Homeowner’s insurance – The buyer often pays the first year of homeowners insurance at closing.

  • Initial interest – Lenders will ask buyers to pay interest on their mortgage for the period between closing and the first mortgage payment.

  • Closing fee – The seller must compensate the title company or attorney that conducts the closing.


These are the costs associated with real estate closings, and now you know who pays them. It’s always a good idea to get professional guidance concerning your closing, and Borders and Borders can help. Our attorneys assist with a variety of services including:

  • Residential & Commercial closings

  • Title Searches & Reports

  • 1031 Tax Deferred Exchanges

  • Business Formations

  • Wills & Probate

  • Investor Services


Contact Borders and Borders today if you need assistance with your real estate transaction or if you have any questions about your closing. We’re here to help!

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