Buying Real Estate Costs More Than Just the Purchase Price: A Glimpse Into Closing Costs

Closing costs paid by the buyer

In addition to the purchase price of the property, buyers should be prepared to pay certain out-of-pocket expenses at or prior to the closing. The most typical of these include:

Attorneys’ fees: Charged by your real estate attorney to prepare and review the contract of sale and perform title clearance activities.

Courier fee: Paid to the title closer for the transportation of paper documents.

Property inspection: Even if an inspection isn’t required, it’s wise to get one to help uncover any issues with the property before you buy it.

Property insurance: Protects against physical damage to your property and personal belongings due to fire, wind, and other perils; and other risks that occur after you purchase the property, such as theft or injury to a third party.

Property taxes: If the seller has paid property taxes for a period beyond the closing date, you can expect to reimburse the seller your pro rata share of such payment.

Recording fee: Charged by the county for recording public land records, such as deeds and mortgages.

Survey fee: Charged by a surveying company to confirm a property’s boundaries.

Title insurance: Protects against financial losses arising from issues with the property’s title, such as liens (e.g., unpaid taxes, mortgages), encroachments (e.g., a neighbor’s fence on your property), title defects (e.g., errors in public records). title fraud, and other ownership disputes that existed before you bought the property.

Title searches: The buyer is responsible for hiring a title company to search property records to ensure there aren’t any known issues with the property’s title, such as judgment or tax liens.

Closing costs paid by the seller

Although buyers bear the bulk of closing costs, sellers don’t get off scot-free. As a seller, you’ll typically pay your own attorneys’ fees; your pro rata share of property taxes if, as of the closing date, you haven’t paid the taxes for the current period; and a transfer tax imposed by the state to transfer title to the buyer.

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