When you sell a house, the sale price isn’t what lands in your bank account. Closing costs, payoffs and fees come out first. Both the buyer and the seller usually pay some of them, but who pays what depends on your state, local custom and, most of all, what’s in the contract. Here’s how it typically breaks down.
The short answer
In a traditional sale, the seller usually pays the real estate agent commissions, their share of title and settlement fees, any transfer taxes that local custom assigns to sellers, and prorated property taxes and HOA dues. The buyer usually pays their lender’s fees, the appraisal, their inspection and the lender’s title insurance policy. Almost everything is negotiable, and in some sales one side covers nearly all of it.
Costs sellers commonly pay
- Agent commissions. Usually the largest cost. Since 2024 rule changes, the commission paid to the buyer’s agent is negotiated separately rather than automatically offered by the seller, but many sellers still agree to cover it.
- Transfer taxes. Some states, counties and cities charge a tax when property changes hands. Who pays, and how much, varies a lot by location. Some places don’t charge one at all.
- Owner’s title insurance. In many areas the seller buys the buyer’s owner’s title policy. In others, the buyer does. This is mostly local custom.
- Settlement, escrow or attorney fees. The title company or closing attorney charges for running the closing. These are often split.
- Mortgage payoff and lien releases. Your remaining loan balance, plus any interest through the payoff date, is paid at closing, along with fees to record the release.
- Prorated property taxes and HOA dues. You pay your share up to the closing date. Depending on how your area bills taxes, this can be a credit to the buyer.
- Repair credits and concessions. After an inspection, buyers often ask for repairs or a credit toward their own closing costs. These don’t show up on a list of “closing costs,” but they come out of your proceeds all the same.
Costs buyers commonly pay
- Loan origination fees, points and other lender charges
- Appraisal and home inspection
- Lender’s title insurance policy
- Recording fees for the new deed and mortgage
- Prepaid items like homeowners insurance and escrow deposits
What’s negotiable
Nearly all of it. In a slow market, buyers often ask sellers to cover part of their closing costs. In a hot market, sellers have more leverage. The purchase contract is what actually decides who pays each item, so read it carefully, and ask your title company or attorney for an estimated settlement statement before you sign, so you know your bottom-line number.
How to estimate what you’ll walk away with
Start with the expected sale price, then subtract:
- Your mortgage payoff and any liens
- Agent commissions (if you list)
- Your share of title, settlement and transfer costs
- Prorated taxes and HOA dues
- Likely repair credits or concessions after the buyer’s inspection
- The cost of carrying the house until it sells: mortgage, taxes, insurance, utilities and upkeep
That last one is easy to forget. Every month a house sits on the market costs you money.
How closing costs work in a cash sale
With a cash buyer, there’s no lender, so there are no loan fees, appraisal or lender’s title policy. There are also no agent commissions. Many cash buyers go further and pay the seller’s closing costs too. At BAM, we pay all of the closing costs, so the number on your offer is the number you walk away with, minus only your mortgage payoff and any liens. (Always confirm this in writing. Some buyers advertise “no fees” and then deduct costs at closing. Our guide to red flags to watch for covers this.)
If you’re weighing a cash offer against listing, our cash buyer vs. realtor comparison shows how to line up the two numbers fairly. Or get a free cash offer and we’ll show you exactly what you’d walk away with.
Closing costs and customs vary by state and county. This is general information, not legal or tax advice, so check with your title company or a real estate attorney for your specific situation.
