Closing costs are the fees and charges paid to complete a real estate transaction: lender fees, title insurance, appraisal, recording fees, transfer taxes, attorney or settlement fees, and prepaid items such as interest and escrow deposits. Buyers and sellers each pay their own share, which varies by state, loan type and the contract.
Closing costs are the second-biggest cash surprise for buyers and a key line on every seller net sheet. Knowing typical local costs lets agents set expectations, structure seller concessions and avoid deals that fail for lack of cash.
Example: on a $425,000 purchase with a $382,500 loan, buyer closing costs of around 2.5% to 3.5% of the price would be roughly $10,600 to $14,900, before the down payment.
Both parties pay certain costs, set by local custom and the contract. Sellers often pay transfer taxes and the owner's title policy in some states. Buyers pay lender fees and prepaids.
Some can: lender fees between lenders, and the split between buyer and seller in the contract. Government fees and taxes generally can't.
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