The fees connected with the buying or selling a home are called closing costs. Certain costs are routinely charged to either the buyer or the seller; other costs are either negotiable or specified by local convention.

Buyer closing costs

When a buyer applies for a loan, lenders are required by law to provide them with a good-faith estimate of their closing costs. Some closing costs are paid in advance, such as fees associated with the loan application. Normal buyer closing costs may include:

• Title insurance premiums
• Escrow fee
• Document preparation (if applicable)
• Notary fees
• Recording charges for all documents in buyer's names
• Termite inspection (according to contract)
• Property Tax pro-ration (from date of acquisition)
• Homeowner's association transfer fee
• All new loan charges (except those required by lender for seller to pay)
• Assumption/change of records fees for takeover of existing loan
• Beneficiary statement fee for assumption of existing loan
• Inspection fees (roofing, property inspection, geological, etc.)
• Home warranty (according to contract)
• City/County transfer/conveyance tax (according to contract)
• Fire/hazard insurance premium for first year

Seller closing costs

If the seller has a remaining balance on their mortgage, the escrow company will contact the sellers lender to receive a pay-off value to satisfy the mortgage. Along with other fees, the original mortgage will be paid for at closing prior to the seller receiving any proceeds. Typical seller closing costs may include:

• Real Estate Commission
• Document preparation fee for Deed
• Documentary transfer tax (amount varies per purchase price)
• Any City/County transfer/conveyance Tax (according to contract)
• Payoff of all loans in seller's name (or existing loan balance if being assumed by buyer)
• Interest accrued to lender being paid off, Statement Fees, Re-conveyance Fees and any Prepayment Penalties
• Termite inspection (according to contract)
• Home warranty (according to contract)
• Any judgments, tax liens, etc., against the seller
• Recording charges to clear all documents of record against seller
• Property Tax pro-ration (for any taxes unpaid at time of transfer of title)
• Any unpaid homeowner's association dues
• Any and all delinquent taxes
• Notary fees

  Negotiating Closing Costs

  Besides the purchase price, buyers and sellers sometimes include closing costs in their negotiations. For example, A buyer may request that the seller pay the points on the loan. There's no "standard" way to negotiate closing costs.

  Pro-rations

  At closing, some costs are often prorated between buyer and seller. The most common pro-rations are for property taxes. This is because most property taxes are paid in arrears. On the day of closing, property taxes are paid, up to and including the date of transfer, by the seller. Typically the buyer will receive a credit for taxes, re-establishing a tax lien back in arrears.

  If the property is a rental property, rents are usually pro-rated and security deposits are credited to the buyer.

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