Selling a Menifee house is not a two-party affair. In any given sell, there might be five or six invested parties: a buyer, a seller, a real estate agent, a lender, a lien holder, a broker…The list goes on and on. And when closing day arrives, all of those parties will be crowded around the table, vying for their cut of the money being exchanged. Anyone who gets involved in the transaction will impose closing costs fees on the sale. The buyer and seller are left to distribute these closing costs fees between themselves.
The typical distribution of closing costs fees is like this:
Buyers cover line-item costs.
From a Menifee buyer’s perspective, closing a deal on a house is a very paper-work heavy endeavor. Buyers have to coordinate with their lender and their seller before they can secure the keys to a new home.
Because the buyer is bringing the lender on board, buyers usually cover all the line-item closing costs associated with the loan. Those closing costs include an appraisal fee, an origination fee, prepaid interest, prepaid insurance, tax servicing fees, credit report fee, bank processing fee, recording fees, notary fees, and title insurance.
In addition to fees associated with getting a loan, buyers also assume some of the fees associated with home ownership. These might include a fee for membership in a homeowner’s association or pro-rated property taxes, if the deal closes right before taxes are due.
Typically, Menifee buyers spend about 2-5% of the house’s sale price on their closing fees.
Sellers cover commission.
Sellers bring less paperwork to the table than buyers, and they have fewer fees to pay. But that doesn’t mean that sellers pay less on closing day. Sellers pay for the real estate commission, and that often costs more than all the line-item costs combined.
In addition to paying commission, sellers sometimes have homeownership fees to cover. They might have to pay for taxes, pay dues to a homeowner’s association, or pay a fee to their lender, if they are selling the house before they pay the mortgage off.
Typically, Menifee sellers spend 5-8% of the house’s sale price on their closing fees.
But there’s room for negotiation.
Few things in life are non-negotiable. If a seller is particularly motivated to get rid of their home, or a buyer is head over heels in love with the house and desperate to make it their own, the buyer and seller might strike their own agreement about the distribution of closing costs.
Closing costs negotiations can be particularly significant for the buyer and seller. A price reduction of $5,000 will only average out to a savings of a few dollars per month, over the life of the mortgage. But a $5,000 reduction in closing costs is an immediate, significant savings.
There are no rules set in stone. At the end of the day, as long as all the fees are paid, everyone will walk away from the table happy.