Closing Costs: Who Pays What?
Closings costs are a part of the Richmond home buying and selling process that neither party is usually happy about. The seller doesn’t want to lose any of the money they are making and the buyer is already buying a Richmond house. The average closing costs runs right around 2% of the sale price of the house, but it can be more complicated knowing what portion you are responsible for as the buyer or the seller.
The good news is that by the time you reach the closing table you will know exactly what your portion of the expense will be, down to the penny. In fact, once an offer has been accepted you can have a good understanding of how much you will owe.
To help you get started, here is a quick overview on who pays what when it comes to Richmond closing costs.
What the Richmond Buyer Pays in Closing Costs
When it comes to closing costs, the buyer usually pays less; although they do pay for more line items generally than the seller does. Buyers are usually responsible for: appraisal fee, credit report fee, origination fee, bank processing fee, prepaid interest, recording fee, prepaid insurance, notary fee, flood certification fee, title insurance and the tax servicing fee.
As the buyer, you will receive a loan estimate form not long after your offer is approved. This will give you a good estimate of how much you will be paying. If you have any questions on what a line items stands for, talk to your mortgage lender.
What the Seller Pays in Closing Costs
Sellers are not responsible for many items, but they do usually pay the larger portion of the dollar amount. Sellers are responsible for paying any taxes that are owed from the time they owned they property and the biggest item, commission.
The average real estate commission is between 5% and 6% of the sale price of the house. While the commission is split between the seller’s real estate agent and the buyer’s agent, the seller is responsible for paying it.
There are some real estate agents that will slightly negotiate on the commission that they will take. However, you need to discuss this before you sign with them to list your house.
Negotiate the Terms
While you might not be able to negotiate the total closing costs, you can negotiate who pays what. When you are buying a property instead of asking the seller to lower the price, consider asking them to pick up more of the closing costs. This can save you money upfront, making it easier for you to get through closing and into your new home.
Many people consider the items that are a part of the closing costs as “hidden fees.” However, they are not hidden at all. If you stay in contact with your lender throughout the process you should be very aware of what the costs are and how much you owe. You never want to make it to the closing table without an accurate estimate of how much you will owe.