Closing Costs And What You Need To Know

A break down for the proactive buyer and seller

Closing costs are the costs associated with buying or selling a home. They will be different depending on if you are a buyer or seller. Typically buyers will need to save 2–3% of the purchase price to properly plan for their closing if they are not negotiating any seller concessions. Which means the seller will also pay for the buyers closing costs which they may do because the seller doesn’t want to perform any fixes to their home. Every transaction is different and can be very fluid making sure all parties are happy. 

Closing Costs For Buyers

A buyer’s closing costs will consists of:

  • appraisal fee’s
  • origination fee’s
  • home insurance
  • HOA fee’s
  • title insurance
  • property transfer taxes
  • and more

Homebuyers in the U.S. pay, on average, $5,749 for closing costs (including taxes), according to a 2019 survey from ClosingCorp, a real estate closing cost data firm. Where you live will have a significant impact on what you’ll owe to close on your house. According to the data, buyers in Washington, DC paid about $29,888 in closing costs with transfer taxes, while the average Missouri buyer spent $2,061 with transfer taxes.

In Nevada the average closing costs in 2021 was $6383 (including taxes), excluding taxes was $4,222 according to Business Insider.

These fee’s should not be unaware to you, as a lender is required by law to provide you with a loan estimate within 3 business days after receiving your mortgage application which can only be submitted after you find a property. This key document outlines the estimated closing costs and other loan details. Though these figures might fluctuate by closing day, there shouldn’t be any big surprises. Three business days prior to your closing, a lender must provide you with a closing disclosure or the “CD” form.
You’ll see a column showing the original estimated closing costs and final closing costs, along with another column indicating the difference if costs rose. If you see new fees that were not on the original loan estimate or notice that your closing costs are significantly higher, immediately seek clarification with your lender and/or real estate agent.

Closing Costs For Sellers

The average closing costs for a seller total roughly 8% to 10% of the purchase price of the home. Seller closing costs are made up of several expenses. Seller closing costs are made up of several expenses. Here’s a quick breakdown of potential costs and fees:

  • Agent commission
  • Transfer tax
  • Title insurance
  • Escrow and closing fees
  • Prorated property taxes
  • HOA fees
  • Credits toward closing costs

Typically, the seller pays the real estate agent commissions which usually total between 4 and 6%. However, this is not a set amount because the total commission is negotiable between the seller and listing agent. Out of that total commission amount, the seller also usually pays the buyer’s agent commission (the commission for the agent that is working with the person who ends up buying your home), which is generally 2–3% of the total amount offered. So, the 4–6% in commission makes up a large portion of your closing costs in any sale. 

The Bottom Line

Closing costs are unavoidable when you buy a home. If you take proactive steps to shop around and closely analyze your loan estimate with your closing disclosure, you could save big bucks on those fees. As you start saving up for a down payment, set aside enough money for closing costs as well.

If you have any questions about the process, Book Your 15 Min Consult or Contact Us Here

-Alex Juarez, Realtor S.0191493 Las Vegas, NV

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