Real Estate Tip of the Day: – “Closing Costs” – What are they? Who pays? – “Closing Costs” generally refers to the many separate charges that must be paid (settled) at closing by both seller & buyer. Sellers have their set of closing costs & Buyers have their own separate set of closing costs.
When a property is sold, a title company will perform title research to ensure that the title is in fact free & clear and can be transferred to the buyer, then they will ensure that a title insurance policy is issued. Examples of additional “closing costs” items will usually also include: transfer stamps for recording the sale of the property at the courthouse and a fee for the title closing agents’ actual work on the transaction, up to, and including performing the closing on closing day. In addition, in Arkansas,the seller will typically also be responsible for paying both the listing & the selling real estate brokers’ commissions. There may also be additional miscellaneous other charges, depending on the specifics of the agreed upon transaction.
For buyers who are buying a home and will be getting a mortgage loan, a buyer’s closing costs will likely also include: their loan origination fees, an appraisal fee and any other charges that the lender requires to be paid at, or before closing – such as buying points down, a partial or full payment of buyer’s home owners insurance & a required amount in advance to be held for buyer’s property taxes, just to name a few. The only way to know for sure what your estimated closing costs as a home buyer will be is to have a detailed conversation with your choice of mortgage lenders. If you have a question, the golden rule is: “Ask. Never assume.” (If you’re not getting a mortgage, but will be paying cash instead, many of the above costs won’t apply to you.)
The buyer & seller should each receive their own itemized statement showing their closing costs to review before closing.
So, Who pays for closing costs? Buyers & sellers each have their own “bucket” of closing cost items to pay.
BUYERS: When making an offer and/or negotiating price and terms, BE WISE. Keep in mind that the seller is already responsible for their own set of “closing costs” to be deducted from the agreed upon purchase price.
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* Copyrighted 2018 – Carolyn K. Brinkley – This content is my opinion only. It isn’t legal advice or accounting advice. I’m a Professional Realtor* with 16 yrs. experience as a Keller Williams Realty agent.. Consult with your real estate agent and your title company for the details of you negotiations.