A beautiful home with a sold sign in the front yard.

Who Pays the Closing Costs?

When it comes to buying or selling a home, there are numerous expenses involved in the process. One of the significant costs to consider is closing costs. 

Understanding who pays these costs is crucial for both buyers and sellers. So, we’ll explore the responsibilities of each party and shed light on common practices. Let’s dive in!

The Seller’s Responsibility

As a seller, you might wonder what closing costs you’ll be responsible for. Seller’s costs generally include various fees associated with the home sale. These costs can vary depending on the location and specific circumstances, but here are some common ones:

  • Agent commissions: When you sell a home, you typically work with a real estate agent who assists in the sale. The agent’s commission is usually a percentage of the sale price.
  • Attorney fees: It is common to hire an attorney to oversee the legal aspects of the home sale. The attorney ensures that all necessary documents are properly prepared and reviewed.
  • Title insurance: Title insurance protects both the buyer and the lender from any unforeseen issues with the property’s title. As the seller, you often pay for the buyer’s title insurance policy.
  • Transfer taxes: These are taxes imposed by state or local governments when the property ownership is transferred. These are separate from property taxes, and the responsibility for paying transfer taxes can vary depending on the location.

The Buyer’s Responsibility

As a buyer, you also have your share of closing costs to consider. Here are some of the buyer’s costs you may encounter during the home purchase process:

  • Loan origination fees: These fees are charged by the lender to cover the administrative costs of processing your loan application.
  • Appraisal fees: An appraisal is typically required by the lender to assess the value of the property. The buyer is usually responsible for paying the appraisal fees.
  • Home inspection fees: A home inspection is crucial to identify any underlying issues with the property. The buyer is responsible for hiring and paying the home inspector.
  • Mortgage insurance: If you make a down payment below a certain threshold, your lender may require mortgage insurance. This insurance protects the lender if you default on your mortgage payments.
  • Escrow fees: Escrow services are often used to ensure a smooth and secure transaction. The buyer may be responsible for paying the escrow fees.

It’s important to note that the specific closing costs and their allocation can be negotiated between the buyer and seller.

Two people seated across from one another at a desk negotiating closing costs on a home sale

Negotiating Closing Costs

Negotiation plays a vital role in the home buying and selling process, and closing costs are no exception. Both buyers and sellers have the opportunity to negotiate these costs to reach a mutually agreeable arrangement. Here are some strategies to consider:

  • Research and compare: Do your research and compare closing cost estimates from different lenders, real estate agents, and service providers. This knowledge can give you leverage during negotiations.
  • Request concessions: Buyers can request the seller to pay a portion or all of the costs. Similarly, sellers can negotiate with the buyer to share the cost burden.
  • Trade-offs: In some cases, buyers and sellers can negotiate by offering concessions in other areas of the transaction. For example, the seller might agree to cover more of the closing costs in exchange for a quicker closing timeline.

Remember, negotiation is about finding a win-win solution that benefits both parties.

Exceptions to the Rule

While the buyer’s and seller’s portion of costs are generally understood, there are exceptions to this rule. In some situations, the parties involved may agree to deviate from the norm. Here are a few examples:

  • On certain occasions, sellers may offer to pay a portion or all of the buyer’s closing costs. This may happen in a competitive market or when they’re trying to attract potential buyers.
  • Buyers may agree to cover certain closing costs traditionally paid by the seller. This arrangement can help facilitate the sale, particularly if the seller is facing financial constraints.

Such exceptions are often influenced by market conditions, negotiation skills, and the motivations of both parties.

Who Pays in Different Types of Transactions

Closing cost responsibilities can vary depending on the type of real estate transaction. Let’s take a look at how it typically works in different scenarios:

  • Traditional home purchases: In a standard home purchase, the buyer typically covers most of the closing costs. However, negotiations between the buyer and seller can impact the final allocation.
  • FSBO transactions: When a property is sold without an agent, the parties can negotiate closing costs based on their agreement.
  • Short sales: When the sale price is lower than the outstanding mortgage balance, closing costs may require negotiation between all parties.
  • Foreclosures: Closing costs in foreclosure sales can vary depending on the circumstances. Buyers should conduct thorough due diligence and consult with professionals to understand their financial responsibilities.
  • New construction homes: Builders may offer incentives to attract buyers, such as covering a portion of the closing costs. Buyers should carefully review the terms and negotiate when necessary.

It’s essential to consult with real estate professionals to understand the specific closing cost responsibilities in each transaction type.

A chalkboard with the words "assistance programs" written on it

Assistance Programs

To assist homebuyers with their closing costs, there are various closing cost assistance programs available. These help the buyer cover a portion or all of their closing costs. They aim to alleviate the financial burden associated with purchasing a home. Here’s an overview:

  • Types of programs available: There are different types of assistance programs, including government-sponsored programs, grants, and down payment assistance programs. These programs often have specific eligibility criteria and requirements.
  • Eligibility requirements: Eligibility for closing cost assistance programs can vary. Some programs may have income restrictions, while others may prioritize certain groups such as first-time homebuyers or veterans. It’s essential to research and understand the eligibility criteria for each program.

Closing cost assistance programs can be a valuable resource for homebuyers. Particularly those who may be struggling to save enough for closing costs.


Closing costs are an integral part of buying or selling a home. Understanding who pays these costs is essential for both buyers and sellers to navigate the real estate transaction successfully. In most cases, the buyer is responsible for the buyer’s closing costs, while the seller covers the seller’s closing costs. 

However, negotiation and exceptions to the rule can impact the final allocation. By exploring closing costs, negotiating effectively, and considering closing cost assistance programs, buyers and sellers can navigate the closing process with greater confidence.

At 1 Percent Lists Purple Door Heartland, we understand the complexities of closing costs. It’s our mission to help our clients navigate real estate transactions with confidence and clarity. We’re here to provide you with expert guidance and support throughout the process. 

Our experienced agents will ensure that you have a comprehensive understanding of the closing costs involved, helping you make informed decisions.

If you are looking to buy or sell a home in Leitchfield, KY, reach out to us at 1 Percent Lists Purple Door Heartland. Let us assist you in achieving your real estate goals while minimizing any surprises when it comes to closing costs.

Contact us to take the next step towards a successful real estate journey. Together, we’ll navigate the closing process smoothly, ensuring a seamless and rewarding experience.