What Are Closing Costs? A Teacher-Realtor’s Guide for Buyers and Sellers
As a teacher and a realtor, I know the importance of breaking down complex topics into clear, understandable lessons. Whether you’re buying or selling a home, understanding closing costs can help you avoid unexpected expenses and feel more confident in the process.
What Are Closing Costs?
Closing costs are the fees and expenses paid at the final step of a real estate transaction—separate from the home’s purchase price. Think of them like the school supplies you need for a successful year: necessary, but often overlooked when setting a budget.
How Much Do Closing Costs Cost?
For buyers, closing costs usually range from 2% to 5% of the home's price. Sellers also have closing costs, primarily including real estate agent commissions and legal fees.
Closing Costs for Buyers: A Quick Lesson
If you’re buying a home, here are some common closing costs you should prepare for:
- Loan Origination Fee– Paid to the lender for processing your mortgage.
- Appraisal & Inspection Fees – Think of this like a student assessment—it ensures the home meets value and condition standards.
- Title Insurance – Protects against any hidden legal claims on the property.
- Escrow & Prepaid Expenses – Covers property taxes and homeowners insurance upfront.
- Recording Fees – Pays the county to officially record the home’s sale.
Closing Costs for Sellers: Homework You Shouldn’t Skip
Sellers also have their share of costs, including:
- Real Estate Agent Commission – Typically 5-6% of the home’s sale price, split between the buyer’s and seller’s agents.
- Title Transfer Fees – Covers the legal transfer of homeownership.
- Outstanding Liens or HOA Fees– Any unpaid debts tied to the property must be settled before closing.
- Seller Concessions (if negotiated) – In competitive markets, sellers may agree to cover part of the buyer’s closing costs.
Can Closing Costs Be Negotiated?
Absolutely! Just like students can advocate for extra credit, buyers and sellers can negotiate certain fees. Buyers can shop around for lenders, and sellers may offer to cover part of the buyer’s closing costs to make the deal more appealing.
Final Bell: Wrapping It Up
Closing costs can feel like an unexpected pop quiz, but with the right preparation, they don’t have to be stressful. If you’re thinking about buying or selling a home and need someone who can explain the process in a way that makes sense, I’m here to help—both in the classroom and in real estate!
Let’s connect and make your homeownership goals a reality!
