Closing costs, as you probably already know, are the fees associated with completing the sale of property. There are unique closing costs for both the buyer and seller. These fees can run into the thousands of dollars, and while it’s customary for each party to pay their own share, the seller can sometimes get stuck paying closing costs for both parties. Particularly if there are problems with the home that are going to end up costing the buyer in the long run, such as repairs or upgrades, they may have their agent write a clause into the deal requiring the seller to pay part or all of the closing costs as a stipulation of their offer. It’s not uncommon for a buyer to walk away from a deal should the seller not agree to these terms.
What’s included in the buyer's closing costs? They may encompass, but not be limited to:
- Credit Report fee
- Loan origination fee
- Escrow fees
- Appraisal and inspection fees
- Title insurance
- Survey fee
- Prepayment of PMI and property taxes
- Recording fee
- Pest inspection fee
- Underwriting fee (the cost of assessing the mortgage application)
As you can see, these fees quickly add up – averaging between $3,500 and $7,500 or more. If there are issues that cause a buyer to ask you to pay some of the fees you could be looking at losing a significant chunk of your profit. It’s beneficial to consider options that guarantee your freedom from closing costs so that you can maximize the amount of cash you get out of the sale.