If you are buying or selling a home, you will hear the term “closing costs” a lot, and it is fair to ask, “Who pays closing costs?” The short answer is that both sides usually pay something, just not the same things. Buyers tend to cover costs tied to their loan. Sellers tend to cover costs tied to the sale itself, along with the real estate commission in many cases.
This guide breaks down what each side typically pays, what is negotiable, and how much it can all add up to.
The Quick Answer: Buyer and Seller Costs at a Glance
| Buyer typically pays | Seller typically pays |
|---|---|
| Loan origination fee | Real estate commission (often, though this is now negotiated) |
| Appraisal and credit report fees | Owner’s title insurance, in many areas |
| Lender’s title insurance | Transfer taxes |
| Prepaid interest and escrow reserves | Prorated property taxes and HOA dues |
| Recording fees | Any agreed repairs or credits |
A few of these costs can shift between buyer and seller depending on the state you are in and what both sides negotiate. More on that below.
What Buyers Typically Pay
Most of a buyer’s closing costs are tied to getting the loan itself.
- Loan origination fee, charged by the lender for processing the loan
- Appraisal fee, to confirm the home’s value
- Credit report fee
- Title search and lender’s title insurance, which protects the lender
- Prepaid interest, for the days between closing and your first mortgage payment
- Escrow reserves, an upfront deposit toward future property taxes and homeowners insurance
- Recording fees, to file the paperwork with the local government
These add up fast, which is why it helps to ask your lender for a full list early on.
What Sellers Typically Pay
- Real estate commission, historically the largest cost for sellers, though this is now more negotiated than before (see below)
- Owner’s title insurance: In many states this protects the buyer and is customarily paid by the seller
- Transfer taxes, charged by the state or local government when the property changes hands
- Prorated property taxes and HOA dues, covering the days the seller still owned the home
- Any repairs or credits agreed to after the home inspection
Costs That Can Go Either Way
A few costs are not fixed to one side and often come down to negotiation or local custom.
- Attorney fees, required in some states, optional in others
- Home warranty, sometimes offered by the seller as an incentive
- Title insurance costs, split differently depending on the state
- Transfer taxes: in some areas these are split or negotiated
It is worth asking your agent what is customary in your area before you assume who pays what.
What About the Real Estate Agent’s Commission?
For a long time, this part was simple. Before August 2024, sellers almost always paid both their own agent and the buyer’s agent, typically 5 percent to 6 percent total, split between the two.
That changed after a legal settlement involving the National Association of Realtors. Since August 17, 2024, real estate listings can no longer advertise buyer agent compensation, and buyer’s agents now need a signed agreement with their buyer that spells out how much they will be paid before showing homes.
There is no law saying who has to pay the buyer’s agent. It is a negotiated point now, not an automatic rule. In practice, many sellers still choose to offer to cover some or all of the buyer’s agent fee, especially when they want to attract more offers. In a lot of markets, total commission levels have been drifting back toward the old 5 percent to 6 percent range.
An appeal on the settlement is still working through the courts, with a ruling expected in late summer or fall of 2026, so this is a topic that could shift again. It is worth asking your agent what is happening in your local market right now.
How Much Do Closing Costs Really Add Up To?
You may see very different numbers when you search this online, and both can be correct; they are just counting different things.
| What is counted | Typical amount |
|---|---|
| Lender and title fees only | About $4,500 on average, roughly 1 percent of the home price |
| All-in estimate, including prepaid escrow, insurance, and taxes | 2 percent to 6 percent of the loan amount |
Here is an example. On a $350,000 home, lender and title fees alone might run around $3,500 to $4,000. If you add prepaid escrow, insurance, and a full agent commission on top of that, the all-in total could reach $15,000 to $20,000. The gap comes from whether the commission and prepaid items are included in the number you are looking at.
Ways to Lower or Share Your Closing Costs
- Compare loan estimates from a few lenders, fees can vary more than people expect
- Ask the seller for a credit or concession to help cover your costs
- Check if your loan type allows some costs to be rolled into the mortgage
- If you are using an FHA or VA loan, ask about seller concession limits, FHA caps seller-paid costs at 6 percent of the price
- Time your closing near the end of the month to reduce prepaid interest
A Note for Bakersfield and Flathead Valley Buyers and Sellers
Exactly who customarily pays for things like title insurance can vary by state, and sometimes even by county. What is standard in Kern County, CA, is not always the same as what is standard in Flathead County, MT. Before you assume who pays for what, it is worth asking a local advisor what buyers and sellers in your specific area typically agree to.
Common Questions About Closing Costs
Can I ask the seller to pay my closing costs?
Yes, this is called a seller concession. It is common, especially when the market favors buyers, but it usually needs to be written into your offer.
Are closing costs tax deductible?
Some are, like prepaid mortgage interest and property taxes, but most closing costs are not deductible in the year you buy. A tax professional can tell you which ones apply to your situation.
Can closing costs be rolled into my mortgage?
Sometimes. Certain loan types and lenders allow this, though it usually means a slightly higher loan amount or interest rate.
Do cash buyers still pay closing costs?
Yes. Even without a loan, cash buyers still pay for things like title insurance, recording fees, and prorated taxes.
Ready to Talk Numbers? Talk to an Advisor
Closing costs can feel like a moving target, especially with commission rules still settling into place. A local advisor can walk you through what to expect on your specific purchase or sale.
Contact the Lockhart Real Estate Advisors team to get a clearer picture of your numbers before you make an offer or list your home.