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Monday, January 31, 2022

Who Pays Closing Costs?

There are some big numbers flying around in real estate deals and this means potentially large financial consequences for both buyers and sellers alike. Closing costs, for instance, can get very pricey and may be more than you bargained for if you aren’t paying attention to the details, and there can be a great many details. In fact, many buyers and sellers end up being downright shocked by closing costs. What is included in closing costs and who pays what?

Who Pays Closing Costs?

When you hear “closing costs,” it actually refers to a bundle of costs that will be paid upon the closing of a real estate deal. Usually, both buyers and sellers carry the burden of paying for closing costs, but they won’t pay for the same things. Sellers, for instance, will often pay for the title service and the closing fees. When a piece of property is sold, there must be a transfer of legal ownership of the property form the seller to the buyer. There is a fee for this transfer. There are also title fees to cover the cost of a settlement agent conducting a title search to make sure the title is free and clear of encumbrances and who will also handle the transfer of your title. In New York, both the buyer and seller will usually cover the cost of a title agent or a closing agent.

The buyer will also usually pay the cost of title insurance which will protect the buyer in the event that there is ever a problem that arises regarding the title of the property. Title insurance will cover the cost of legal fees and even reimburse a home’s value depending on the nature of the title issue. The buyer is also often the one who covers any recording fees charged by the state or local government for recording the property’s deed and mortgage information.

Sellers, you will also likely have to pay property tax before the sale closes. If your county collects property taxes at the end of the year for the current year, you will most likely pay the taxes for the portion of the year that you owned the property while the sale closes. This is so that the buyer will not have to pay for property taxes incurred when you still owned the property.

It should be noted, however, that closing costs can be distributed in different ways. In fact, negotiating closing costs can be a great way to save money in the purchase or sale of a piece of property. Other good ways to save on real estate transaction costs is by finding a low mortgage interest rate and also looking around or negotiating realtor fees, should you choose to use a realtor.

Real Estate Attorneys

There are many ways to negotiate during the purchase or sale of a piece of property. Having Merlino & Gonzalez in your corner means we will help you save on things like closing costs while always working to protect your best interests throughout the transaction. Contact us today.


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