BuyersSellers February 8, 2018

Closing costs: What am I expected to pay?

It’s pretty expensive to buy and/or sell a house – and I’m not just talking about the purchase price. There are fees tacked on, but who pays for what? And what are the fees for? Today we’re diving into closing costs and what each party can expect to pay.

Both buyers and sellers typically both pitch in on closing costs, as they are expenses incurred by both parties in transferring ownership of a property. But let’s break it down.


You can expect to pay 3-5% of the purchase price at closing. Meaning, if you purchase a home for $200,000, you can expect to pay $6-10,000 in closing costs. That 3-5% goes toward title insurance, a credit report fee, the appraisal and loan origination fees – among other things. The lender will also collect about two months of advanced payments on property taxes and insurance.

Some closing costs (like the home inspection) are paid before the home is officially sold, but most are covered at the end when the house closes.


You can expect to pay about 9% at closing. This goes toward state excise tax, some fees (like title and escrow), and the big dog: real estate commissions. Real estate commissions are 6% (on average). I get this question from sellers a lot: why do I have to pay for the buyer’s agent, too!? Well, you are actually hiring the listing agent (your agent) for 6%. Then they use half of their commission as an incentive for other professionals in the area to bring them a matching buyer. If the listing agent is able to bring their own buyer to the table, then they get to keep the full commission.

One more heads up: the closing company pays your last water bill and they will typically collect about double what’s expected – just in case. Then they will reimbursement you the following month with whatever is left.