What’s Included in Closing Costs?

Q: What are closing costs? Do they include the Realtor’s Fee? And who pays the Realtor’s fee? –Robin

A: Closing costs if there is a lender involved are all the charges that the lender tacks on to give you a loan – they total about 3.5 percent of your loan amount. The realtor fees are Always paid by the seller so they are not called closing costs . The attorney or title company, document prep fees, escrow amounts for taxes and insurance and recording fees and wire transfer fees are examples of closing costs – but in any real estate contract – the closing costs are spelled out – (In Georgia on the first page) and so its easy to understand. I am not licensed in CA so I’m assuming there are some differences – the short answer is that the realtor’s fee are NOT included in Closing Costs and the seller pays them – unless the buyer has agreed to do so …like in the case of a ‘for sale by owner’ transaction. I hope this helps.

Leah Layman is a Realtor with Keller Williams Realty-Augusta Partners in Augusta, GA.

A: Closing costs are fees charged by title companies, banks, lenders, etc. that are associated with the purchase of a home. These fees typically range from 2 1/2 – 4% of the selling price of the property. Items such as loan origination fees, discount points, appraisal, survey, underwriting fees, title search fees, title insurance. It is a good idea to get an estimate of closing costs from 2 or 3 lenders so you have a good idea of costs prior to making an offer. Don’t forget that you can ask the Seller to pays these costs or negotiate a higher interest rate to have the lender charge less in fees or discount points. Realtor’s commissions appear on the settlement statement and can be paid by buyer or seller. The terms of who pays are outlined under a listing agreement on the property being sold. Have your Realtor explain who is expected to pay the commission in a transaction.

Julie Chapman is a Realtor with Chapman Realty in Brunswick, GA.

A: The seller pays the realtor’s fees and his/her own share of closing costs. The buyer pays closing costs and this ranges based on your loan amount (how much you are borrowing) and other fees. Best thing to do is to consult with a local lender who can give you a “good faith estimate” of lending fees and closing cost.

Maria Jeantet is a Realtor with Coldwell Banker C&C Properties in Redding, CA.

A: You could consider realtor fees (= commission) as part of closing costs. The best way is to talk to any local Title Company – ask them about closing costs. One cannot talk about closing costs without knowing if you are a buyer or seller. The biggest single closing cost will be commission – seller pays not buyer. But many closing costs will depend on the type of property; if land is included, land survey may have to take place. If septic tank is included, draining and inspecting will cost some money. There may be secondary inspection required – for example: home inspector may decide that roof is in marginal condition so roof inspection by a roofer may be needed. I hope this information is helpful.

George Szkup is a Realtor-Broker with Tucson Home Advisor in Tucson, AZ.

A: Typically the seller pays the Realtor fees both for the listing agent and for the buyers agent. When a seller lists a property in the MLS they are offering compensation to a buyers agent as part of the listing. Some buyer agents may require more than is being offered. This sometimes happens in foreclosures and short sales but it is rare.

Buyer closing costs will vary but they could include some or all the following: attorney fees, title search/insurance fees, mortgage application fees, mortgage origination fees, state/local transfer taxes, HOA set up fees, flood certification, home warranty, appraisal fees, mortgage insurance premium, home insurance premium, attorney fees, processing fees, and any pro-rated items like taxes, HOA dues, or utilities…

It is permissible to ask the seller to pay for some or all of your closing costs, but this will ultimately affect the final price you are able to negotiate. You must pay your own down-payment. The seller can not do this for you.

Read more: What’s Included in Closing Costs? | REALTOR.com® Blogs

8 ways to cut closing costs

8 ways to cut closing costs

8 ways to cut closing costs

Not only should you prepare for closing costs, you should also plan to negotiate them.

Closing costs are a hidden speed bump in the home purchasing process. Many people are so worn out at that point, that they just pay the closing costs and keep driving ahead at full speed. That's exactly what many lenders and brokers hope that you'll do.

Prepare for the closing costs before you get started and they'll seem like just another part of the process. And the few hundred dollars you save will come in handy when the water heater breaks the first week that you move in!

Check out the following eight tips to start getting an idea of how to cut closing fee costs:

#1: Plan ahead: shop around and get estimates on closing costs from lenders before you get pre-approved for your loan. While you should ultimately look at the closing costs along with other factors like the interest rate, you'll be able to get a ballpark figure of what they should be. Closing costs are generally 3%-5% of the total cost. If they are more than that, you can probably dismiss that lender.

#2: Simply ask the seller to share or pay for the closing costs. It's worth a shot, especially in this economy. If the seller is motivated to close the deal quickly, he or she just might agree to it.

#3: Get a Good Faith Estimate. Your GFE is an estimate of how much the closing costs will come to. According to federal law, the actual individual fees can vary up to 10% from the quoted levels in the GFE. Study your GFE and contest or negotiate any suspicious fees (we'll get to this in later steps). At least a day before closing, ask for you HUD-1 settlement statement. Make sure that this final tally of your closing costs matches the GFE and that no last minute fees have been tacked on.

#4: Ask your broker or lender to explain the closing cost fees to you. If you don't understand what the cost is for, have them tell you. If you can't get a good explanation, that's a sign that the fee is inflated or unnecessary.

#5 Determine what fees are "trash" or "garbage" fees. Are there excessive documenting and processing fees? Lender's inspection fees? Commitment fees? Assumption fees? Document preparation fees? These can likely be lowered or negotiated.

#6 Check to see how much you've been charged for the credit report. Are they charging you $150? It's probably bloated. And if they are sneaking that one by you, there are likely others.

#7 Make sure that you haven't already paid any of the fees. You've probably already paid an appraisal fee. Make sure that they aren't charging you twice.

#8 Title Company fees. Lenders or brokers often have a partnership with a title company. Check out the fee and do a little research to see if you can find a cheaper title company to work with.

It may feel like you are at the mercy of your lender or broker when it comes to things like closing fees. You can't forget, though, that the lender or broker wants the deal to close as much as you do. Remind yourself that you can walk away at any time and it will put you in a much better mental position to negotiate.