Who pays closing costs, the buyer or the seller?

Both sides of a real estate transaction have closing costs, but they're different types.

Typical buyer closing costs

• Lender fees (origination, underwriting)
• Appraisal fee
• Prepaid items (homeowners insurance, property taxes, interest)
• Lender's title insurance policy
• Recording fees
• Various other transaction fees

Typical seller closing costs

• Real estate agent commissions (both sides)
• Owner's title insurance policy (in many areas, this is a seller cost by local custom, though it varies)
• Prorated property taxes
• Any seller concessions agreed upon in the contract

What's negotiable

The allocation of closing costs is negotiable. Buyers commonly ask sellers to contribute toward the buyer's costs through seller concessions. This reduces what the buyer needs to bring to closing and is a common part of offer negotiations.

Local custom matters

In Alabama and Tennessee, local practices can influence who traditionally pays for what, particularly around title insurance. Your agent will explain what's customary in your area and how to position this in negotiations.

The bottom line

Don't assume the other party automatically pays your costs. Know your own expected costs, understand what's negotiable, and use that information strategically when making or responding to offers.