When you make an offer on a property, a grid in the sales contract lists all sorts of costs and designates who pays what.
If the Buyer is getting a mortgage, there are specific lender fees.
The Buyer usually pays:
- costs associated with their loan-origination fees
- processing and preparation fees
- credit report fees
- for long-term mortgages, the Buyer usually pays the first year of property insurance
- a few months of insurance and taxes that fund the “reserve account”
There may also be prepaid loan interest depending on the day of the month the sale records. Lender fees, reserves, and prepaids are typically 3% of the purchase price.
The Seller typically pays costs associated with the property. This includes:
- Owner’s Title Insurance (which assures that the property will be free and clear of liens at recording)
- the appraisal (which supports value)
- updated survey fees
- well or septic inspections
Outstanding mortgages, IRS or child support liens, assessments, or late taxes will all show up on title reports
“Mutually Beneficial” fees like escrow closing fees and recording fees are generally split between Buyer and Seller.
These fees are very reasonable and also apply to a cash sale. As in all things, who pays these fees is negotiable.