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Buyer or Seller: Who Pays for Closing Costs?

Updated: Jun 6, 2023

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It does not matter what end of the real estate transaction you are on, as your closing date approaches, you are sure to inquire about your closing costs. And for a good reason, since you don’t want anything to get between you and the buying or selling of the property.

Of course, one of the biggest questions is who pays closing costs. Is it the buyer? The seller? Both?

Gathering this information and knowing what you are - or are not - responsible for can make your closing day go much more smoothly.

What is Included in Closing Costs?

Closing costs can be very different for every real estate transaction, including the costs incurred, how much they are, and who pays them. Not to mention that each state - and some counties - have a traditional way they do things. For instance, it may be common for a seller to purchase title insurance in one state whereas in another state the buyer may be the one responsible.

So, what is included in closing costs?

Closing costs often consist of realtor commissions, property taxes, HOA fees, inspection fees, appraisal fees, title fees, credit reporting fees, homeowner’s insurance, and a few others.

When it is all said and done, buyers can expect to pay, on average, between 2% and 5% of the sale price. Sellers, on the other hand, can expect to pay a bit more - an average ranging from 6% to 10% of the sale price.

Who Pays For Closing Costs in a Real Estate Transaction?

With so many costs that must be paid at closing, it is not unusual for them to be split up between the buyer and seller. Sometimes both parties negotiate the payment of these fees, too.

In a very broad sense, a seller’s closing costs are:

  • Realtor commissions

  • Title fees for transferring the property

  • Outstanding property taxes

  • HOA fees

  • Payoff or lien clearing and release fees

A buyer’s closing costs are:

  • Title search fee

  • Title insurance fee

  • Credit reporting fee

  • Underwriting fees

  • Homeowners Insurance

  • Inspection and appraisal fees

It’s worth noting that many of the buyer’s closing costs are part of the loan or mortgage.

Maryland Closing Costs

Let’s look at how Maryland handles the closing costs of its real estate transactions. Remember, closing costs and who is responsible for them will vary from state to state. In Maryland both the buyer and the seller pay closing costs.

It is customary for each party to cover different costs with both of them splitting the transfer taxes. Sellers often pay their portion of the state and county transfer taxes, as well as the title fees and realtor commissions (for each realtor).

A buyer in Maryland has quite a few more costs that are due at closing, which may or may not include:

  • Appraisal fee

  • Inspection fee

  • Survey fee

  • Recordation tax for county and state

  • Recording fee

  • Loan origination fee

  • Title fees, including title insurance

  • Escrow fee

  • Credit report

The total costs and whether or not you even have to pay them will vary greatly from transaction to transaction, especially as it relates to the method of purchase. For example, cash buyers often see fewer closing costs.

Working with a reputable title company will give you access to the details of the costs you can expect ahead of your closing.

Your Trusted Maryland Title Company

Not knowing what your closing costs are can put your real estate purchase in jeopardy - especially if you are the buyer. After all, you need to make sure you have the right amount of funds available to cover these costs.

At Endeavor Title, our team of experienced title agents will keep you informed as we walk through each stage of your real estate transaction and discuss the details of your closing costs. Or, to get an idea of what you can expect, check out our Closing Costs Calculator.

Get started today. Contact us at (410) 666-3780.

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