Both buyers and sellers pay closing costs in a real estate transaction, but they pay for different things. Buyers pay the majority of transaction fees — typically 2% to 5% of the purchase price in loan-related and due-diligence costs. Sellers pay the largest single costs — typically 6% to 10% of the sale price, driven primarily by agent commissions, owner’s title insurance, and transfer taxes.
On a $400,000 home, that’s $12,000–$20,000 in closing costs for the buyer and $24,000–$40,000 for the seller — though all closing costs are negotiable in the final purchase contract. Following the August 2024 NAR settlement, buyer-agent compensation is now negotiated separately, which has shifted how some of these costs are allocated between parties.
This guide covers who pays what, how much to expect at every price point, how to negotiate, and whether any closing costs can be eliminated — on either side of the transaction. If you’re a seller looking to skip the largest portion of these costs entirely, iBuyer.com connects you with cash buyers who close in days with no agent commission.
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Table of contents
- Buyer Closing Costs (Approx. 2%–5% of Purchase Price)
- Seller Closing Costs (Approx. 6%–10% of Sale Price)
- How Much Are Closing Costs in Total?
- Can Buyers and Sellers Negotiate Who Pays Closing Costs?
- Who Pays Closing Costs by State?
- Frequently Asked Questions
- Methodology and Sources
- Want to Skip Most of These Costs?
Buyer Closing Costs (Approx. 2%–5% of Purchase Price)
Buyers pay costs associated with securing their mortgage and performing due diligence on the property. On a $300,000 home, that typically means $9,000 to $15,000. On a $400,000 home, $12,000 to $20,000.
The biggest closing costs buyers pay
Ranked by typical cost magnitude:
Loan origination and application fee — the lender’s charge for processing your mortgage, typically 0.5%–1% of the loan amount. On a $300,000 loan, that’s $1,500–$3,000. This is usually the single largest buyer closing cost and one of the most negotiable. According to CFPB guidance on mortgage closing fees, lenders are required to provide a Loan Estimate with itemized fees within three business days of application.
Prepaid items — homeowners insurance premiums, property tax prorations, and prepaid mortgage interest (interest from closing date to end of the month). These are often the second-largest bucket and aren’t fees in the traditional sense — they’re costs you’d pay anyway, just collected at closing.
Title insurance (lender’s policy) — protects the lender against ownership disputes that predate the sale, typically 0.1%–0.5% of the loan amount.
Appraisal fee — an independent appraisal to verify the home’s market value, typically $300–$600. Required by most lenders.
Home inspection fee — checks the property’s physical condition, typically $300–$500. Technically optional, but skipping it is rarely advisable.
Recording fees and transfer taxes — government fees to register the deed in the new owner’s name. Varies significantly by state and county.
Credit report fee — a small fee (typically $25–$50) for the lender to pull your credit history.
How much cash is needed at closing?
Many buyers confuse closing costs with cash to close. Closing costs are the fees above. Cash to close is closing costs plus your down payment — the full amount you need to bring to the table on closing day.
Example: $300,000 home, 10% down payment, 3% closing costs.
- Down payment: $30,000
- Closing costs: $9,000
- Cash to close: $39,000
This total appears on the Closing Disclosure, which lenders must provide at least three business days before closing. Review it carefully — it should match the Loan Estimate you received at application.
No-closing-cost loans
Buyers who are short on cash have two alternatives. First, a lender credit — the lender covers closing costs in exchange for a higher interest rate. Second, rolling costs into the loan — adding closing costs to the loan balance. Both options avoid upfront cash but increase the long-term cost of the mortgage. A lender credit of $6,000 might cost you $50–$80 per month more in interest over 30 years.
Bankrate’s closing costs analysis shows these tradeoffs clearly — whether a lender credit makes sense depends entirely on how long you plan to stay in the home.
Seller Closing Costs (Approx. 6%–10% of Sale Price)
Do sellers actually pay closing costs?
Yes — sellers pay significant closing costs, though it rarely feels like it because these costs come out of sale proceeds automatically rather than requiring a separate check. The title company or escrow agent deducts everything before the seller receives their net. On a $400,000 sale, sellers typically see $24,000–$40,000 deducted before they receive anything.
What sellers pay for
Real estate agent commissions — traditionally 5%–6% of the sale price and the largest single seller closing cost. Post-NAR-settlement, sellers may only pay their listing agent (typically 2.5%–3%) if buyer-agent compensation is handled separately — though many sellers still offer to cover the buyer’s agent as a concession.
Owner’s title insurance — protects the buyer from ownership claims that predate the sale. Typically 0.5%–1% of the sale price. Unlike the lender’s title insurance (paid by the buyer), the owner’s policy is customarily the seller’s responsibility in most states.
Transfer taxes — government fees for transferring the property deed. These vary dramatically: Texas and Florida have no state transfer tax on most residential sales, while New York and Maryland can charge 1%–2% of the sale price.
Prorated property taxes and HOA fees — sellers owe taxes and association dues through the closing date. If taxes are paid in arrears (as they are in most states), the seller credits the buyer for days already elapsed in the tax year.
Attorney fees — mandatory in attorney-required states (New York, New Jersey, Georgia, South Carolina, Massachusetts, Connecticut, Vermont, Maine, New Hampshire, Rhode Island, Delaware, West Virginia, and parts of others), typically $500–$2,500.
Escrow and settlement fees — the title company or escrow agent’s charge for managing the transaction, typically $500–$2,000.
How seller costs affect net proceeds
The math is direct: every dollar in closing costs reduces net proceeds by one dollar. On a $400,000 sale:
- Agent commission (5.5%): −$22,000
- Title, taxes, and other seller costs (~2.5%): −$10,000
- Total closing costs: −$32,000
- Net before mortgage payoff: ~$368,000
Nationwide’s closing costs explainer notes that sellers in high-cost states (New York, Maryland, New Jersey) frequently see total selling costs exceed 10% once transfer taxes and attorney fees are factored in.
Post-NAR-settlement: what changed for sellers
Before August 2024, sellers paid both agents automatically. Now buyer-agent compensation is a negotiated decision — sellers can choose whether to offer it and how much. In hot markets, many sellers have stopped offering buyer-agent concessions. In slower markets, offering 2%–2.5% to the buyer’s agent still helps attract agent-represented buyers. This is now a strategic line item, not a default.
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How Much Are Closing Costs in Total?
What is considered a high closing cost?
For buyers, closing costs above 5% of the purchase price are generally high. Elevated origination fees, expensive prepaid items, or high-transfer-tax states are the usual culprits. For sellers, total selling costs above 10% of the sale price are high — most commonly caused by full commission on both sides plus premium attorney fees or high state transfer taxes.
What is 6% of closing costs?
Readers frequently search this because 6% is both the traditional seller-side commission and the FHA loan maximum seller contribution limit. In real dollars: 6% of a $300,000 home = $18,000. 6% of a $400,000 home = $24,000. 6% of a $500,000 home = $30,000. Whether that 6% covers commission, closing cost contributions, or a combination depends on how the contract is structured.
Closing costs by home price
| Home Price | Buyer Costs (3%) | Buyer Costs (5%) | Seller Costs (6%) | Seller Costs (10%) |
|---|---|---|---|---|
| $250,000 | $7,500 | $12,500 | $15,000 | $25,000 |
| $300,000 | $9,000 | $15,000 | $18,000 | $30,000 |
| $400,000 | $12,000 | $20,000 | $24,000 | $40,000 |
| $500,000 | $15,000 | $25,000 | $30,000 | $50,000 |
| $600,000 | $18,000 | $30,000 | $36,000 | $60,000 |
| $750,000 | $22,500 | $37,500 | $45,000 | $75,000 |
Zillow’s closing costs guide confirms these ranges align with current national data, noting that buyer costs vary more by lender and location than seller costs do.
How closing costs appear on the documents
Buyers receive a Closing Disclosure three business days before closing with full itemization. Sellers receive a separate seller’s settlement statement. Both should be reviewed before signing — discrepancies between the Loan Estimate and Closing Disclosure are common and usually negotiable with the title company.
Can Buyers and Sellers Negotiate Who Pays Closing Costs?
Yes, buyers and sellers can negotiate who pays closing costs, and it is a common practice in real estate transactions. The purchase contract is where all closing cost decisions are finalized — nothing about who pays is automatic except what state or local law mandates (like certain transfer taxes).
Can a seller refuse to pay closing costs?
Yes, a seller can absolutely refuse to pay any buyer closing costs. Seller concessions are never required — they’re a negotiating tool. In a seller’s market where demand exceeds supply, most sellers decline to offer any concessions because they don’t need to. In a buyer’s market with high inventory and slow sales, refusing concessions can make a listing harder to sell or kill deals that would otherwise close.
Why does the buyer want me to pay closing costs?
Buyers ask sellers to cover closing costs most often when they’re stretching their available cash to cover the down payment. A 3% closing cost contribution on a $300,000 home is $9,000 — enough to keep a buyer in the deal who’s already putting 10% down. For sellers, agreeing to cover closing costs in exchange for a higher offer price is a common counter-strategy: the seller may net the same amount while helping the buyer stay qualified. The key is to run the math rather than refuse reflexively.
What is the most a seller can pay in closing costs?
Lenders cap how much sellers can contribute to prevent artificial home price inflation. The maximum depends on loan type and the buyer’s down payment:
| Loan Type | Max Seller Contribution |
|---|---|
| Conventional (less than 10% down) | 3% of purchase price |
| Conventional (10%–24% down) | 6% of purchase price |
| Conventional (25%+ down) | 9% of purchase price |
| FHA Loans | 6% of purchase price |
| VA Loans | 4% of purchase price |
| Investment Properties | 2% of purchase price |
These limits apply regardless of what’s written in the purchase contract — if the concession exceeds the limit, the lender will require it to be removed before funding. NAR’s seller concessions guide notes that sellers and buyers often structure offers so the concession sits just below the applicable cap to maximize the benefit without tripping the lender limit.
Why would a seller pay all closing costs?
Sellers occasionally cover all buyer closing costs in three main scenarios: the home has sat on the market for an extended period and needs an incentive to close, the buyer is using a VA loan (where sellers paying all costs is a common and accepted strategy), or the seller is motivated by a hard deadline and is willing to give up proceeds to close quickly. On a $400,000 home, paying all buyer closing costs might cost the seller $12,000–$20,000 — a real concession, but sometimes less expensive than carrying the home for another three months.
Seller credit vs. price reduction: which is better?
This is a decision most articles skip. On a $400,000 home, the seller has two ways to give a buyer $8,000: a price reduction to $392,000 or a $8,000 seller credit. The price reduction saves the buyer roughly $40–$45/month on their mortgage payment. The seller credit saves the buyer $8,000 in cash at closing. In 2026, with buyers managing both elevated rates and large down payments, most buyers strongly prefer the credit over the price cut — the immediate cash relief outweighs the small monthly savings.
How to lower closing costs
For buyers: compare lender fees on the Loan Estimate, negotiate origination and application fees (they’re more negotiable than lenders imply), shop title insurance independently where state law allows, ask for seller concessions in the offer, and consider a lender credit if you’re planning to sell again within five years.
For sellers: interview multiple agents to negotiate listing commission, offer only the buyer-agent concession the market requires (not a blanket offer), and consider whether cash-sale alternatives eliminate the commission line entirely.
PNC Bank’s closing cost breakdown walks through each negotiable line item from the lender’s perspective — useful reading before any closing cost negotiation.
Rocket Mortgage’s closing costs guide provides a parallel view from the lender side, including which fees have the most flexibility.
Who Pays Closing Costs by State?
Closing cost customs and legal requirements vary significantly by state. What’s standard in Texas is unusual in New York — and vice versa.
Attorney-required states require both buyer and seller to hire attorneys to manage the transaction. These states include New York, New Jersey, Georgia, South Carolina, Massachusetts, Connecticut, Vermont, Maine, New Hampshire, Rhode Island, Delaware, and West Virginia, among others. Attorney fees run $500–$2,500 per side and are a fixed seller cost in these markets.
Transfer tax customs vary widely. In New York and Maryland, the seller typically pays. In Pennsylvania and Ohio, transfer taxes are often split 50/50. In Texas and most of Florida, there’s no state transfer tax on residential sales.
Title insurance customs also differ. In some states the seller pays for the owner’s title policy; in others the buyer does; in some markets it’s negotiated. This alone can shift 0.5%–1% of sale price between sides.
High-cost states for sellers — New York, New Jersey, Maryland, and California — regularly see total seller closing costs exceed 10% of sale price once transfer taxes, mansion taxes (NY), and required attorney fees are included.
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Frequently Asked Questions
Sellers typically pay the most in total closing costs, largely because agent commissions alone often equal 5%–6% of the sale price. On a $400,000 transaction, the seller might pay $24,000–$40,000 while the buyer pays $12,000–$20,000. In absolute dollar terms, the seller’s costs are usually double the buyer’s.
Buyer closing costs on a $300,000 house are typically $9,000–$15,000 (3%–5%). Seller closing costs are typically $18,000–$30,000 (6%–10%), with agent commission being the largest component. Total closing costs for both sides on a $300,000 transaction can reach $27,000–$45,000 combined.
Buyer closing costs on a $400,000 house are typically $12,000–$20,000. Seller closing costs are typically $24,000–$40,000. Total transaction closing costs for both sides combined often reach $36,000–$60,000 on a $400,000 home before mortgage payoff is factored in.
Yes, sellers can refuse to pay any buyer closing costs — seller concessions are always optional. In a competitive market, most sellers decline to offer concessions. In slower markets, refusing may make a listing harder to sell. The purchase contract is where all concession decisions are finalized.
The maximum a seller can contribute is set by the lender: 3%–9% for conventional loans depending on down payment, 6% for FHA loans, and 4% for VA loans. Investment property sellers are capped at 2%. These limits exist to prevent sellers from artificially inflating prices to offset buyer costs.
Most closing costs are not tax-deductible, but some are. For buyers, discount points paid to reduce the mortgage rate are typically deductible in the year paid. Property tax prorations paid at closing may also be deductible. For sellers, closing costs like agent commissions reduce the taxable gain on sale rather than being deducted directly — this distinction matters if you’re near the capital gains exclusion threshold ($250,000 for single filers, $500,000 for married). Always consult a tax professional for your specific situation.
Closing costs can rarely be fully waived, but they can be covered in several ways: negotiate a seller concession into the purchase contract, accept a lender credit in exchange for a higher interest rate, roll costs into the loan balance, or use a closing cost assistance program from a state housing authority. Some lenders advertise no-closing-cost mortgages — the costs are built into the rate, not actually eliminated.
Yes, asking the seller to cover closing costs is a standard negotiating tactic and worth attempting in any market. In a buyer’s market, sellers often agree to cover 1%–3% of buyer closing costs to close a deal. In a seller’s market, concessions are less common, but asking costs nothing. The key is to build the concession request into your initial offer rather than asking for it after you’re already in contract.
In a cash sale, there are no loan-related costs — no origination fee, appraisal, or lender’s title insurance required. Both buyer and seller still pay transfer taxes and title fees, but the total is significantly lower. If the cash buyer is an iBuyer or direct buyer, seller-side commission costs may also be eliminated, making the overall transaction cost the lowest of any sale type.
For buyers, closing costs above 5% of the purchase price are generally high. For sellers, total selling costs above 10% of sale price are high. High buyer costs usually mean elevated origination fees or an expensive prepaid items bucket. High seller costs usually reflect full commission on both sides plus premium attorney fees or high state transfer taxes.
Cash to close equals your down payment plus all closing costs. On a $300,000 home with 10% down and 3% closing costs, you’d need $30,000 + $9,000 = $39,000 at closing. This total is shown on your Closing Disclosure, which your lender must provide three business days before closing.
Yes, seller closing costs are deducted directly from sale proceeds at closing — the seller doesn’t write a separate check. The title company or escrow agent calculates the net amount after all costs are deducted and wires the remainder to the seller, typically within one to two business days of closing.
The August 2024 NAR settlement specifically changed how buyer-agent compensation is handled — it can no longer be advertised on the MLS and buyers must sign written agreements with their agents before touring. Sellers may no longer automatically cover the buyer’s agent fee, though they can still offer it as a seller concession. This has started to push average total transaction costs slightly lower in some markets.
Customs vary significantly by state. Transfer taxes are paid by the seller in some states and split in others. Attorney fees are mandatory in approximately 13 states. Title insurance customs also differ by state and local market. The general 6%–10% seller estimate holds nationally, but specific line items shift considerably depending on your state’s laws and local conventions. See the state guides below for local data.
Methodology and Sources
This guide synthesizes data from multiple closing cost analyses and regulatory sources:
- PNC Bank — closing costs breakdown and buyer/seller responsibilities
- Bankrate — mortgage closing costs analysis and lender fee comparison
- Nationwide — closing costs explainer including state variation
- Rocket Mortgage — closing costs guide and seller concessions analysis
- NAR.realtor — seller concessions limits and negotiation guidance
- CFPB (Consumer Financial Protection Bureau) — government-authoritative closing cost explainer
- Zillow — closing costs data and buyer/seller cost ranges
- American Family Insurance — who pays closing costs analysis
Closing cost structures and lender limits are subject to change. Verify specific figures against current lender guidelines and local market data before making financial decisions.
Want to Skip Most of These Costs?
For sellers, closing costs are the largest single friction in any transaction — and in a traditional listing, most of them are unavoidable. Agent commissions, title insurance, transfer taxes, attorney fees, and carrying costs while the home sits on market add up to tens of thousands of dollars before you see a single dollar of your equity.
iBuyer.com connects sellers with cash buyers who close in days, with no agent commissions and a streamlined closing process. Get a free, no-obligation cash offer in 24–48 hours and see exactly what you’d net — before you commit to anything.
Wondering when to list traditionally? Our guide to the best time to sell a house in 2026 covers the optimal months, weeks, and days to maximize your sale price. Researching the commission piece specifically? Our guide to realtor fees in 2026 breaks down who charges what and how to negotiate.
Reilly Dzurick is a seasoned real estate agent at Get Land Florida, bringing over six years of industry experience to the vibrant Vero Beach market. She is known for her deep understanding of local real estate trends and her dedication to helping clients find their dream properties. Reilly’s journey in real estate is complemented by her academic background in Public Relations, Advertising, and Applied Communication from the University of North Florida. This unique combination of skills has enabled her to seamlessly blend traditional real estate practices with cutting-edge marketing strategies, ensuring her clients’ properties gain maximum visibility and sell quickly.
Reilly’s career began with a strong foundation in social media marketing and brand communications. These skills have proven invaluable in her real estate practice, allowing her to offer innovative marketing solutions that set her apart in the industry. Her exceptional ability to understand and meet clients’ needs has earned her a reputation for providing a smooth and satisfying transaction process. Reilly’s commitment to client satisfaction and her innovative approach have garnered her a loyal client base and numerous referrals, underscoring her success and dedication in the field.
Beyond her professional achievements, Reilly is passionate about the Vero Beach community. She enjoys helping newcomers discover the charm of this beautiful area and find their perfect home.
Outside of work, she loves exploring Florida’s stunning landscapes and spending quality time with her family. Reilly Dzurick’s combination of expertise, marketing savvy, and personal touch makes her a standout real estate agent in Vero Beach, Florida.
