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A home sale may be the most complex purchase you ever make.
Professional service providers like lenders, Realtors, title agents, and attorneys know how to keep home sales on track.
Still, you should know, when buying or when selling a house, who pays for what? Knowing who pays for what can help avoid surprises and uncover opportunities to negotiate a better deal.
When selling a house, who pays for what?
Both buyers and sellers typically contribute to closing costs on a home purchase. Who pays what can vary by location and even by each individual transaction.
Generally, the seller is responsible for costs that prepare and transfer the property. The buyer pays lender fees and costs needed to take ownership of the home.
Modern digital services, like those offered by Better Mortgage, can make this entire process more transparent, helping buyers understand what they’re paying and why.
...in as little as 3 minutes – no credit impact
Typical closing cost breakdown: Buyer vs seller
| Fee type | Traditional payer | Additional notes |
|---|---|---|
| Real estate commission | Seller | Usually the largest seller cost (~5–6%) |
| Transfer taxes | Seller | Varies by state and locality |
| Property taxes | Seller | Seller pays annual bill up to closing date |
| HOA fees | Seller | Seller pays annual fees due up to closing date |
| Escrow fees | Either | Often negotiated or split |
| Attorney or title agent fees | Either | Depending on state requirements |
| Home warranty | Either | Seller may use to sweeten the deal |
| Title insurance | Either | Buyer pays lender policy; seller may pay owner’s policy |
| Tax, HOA, insurance prepayment | Buyer | Annual fees due from closing to end of year |
| Home inspection | Buyer | Buyer orders and pays |
| Appraisal | Buyer | Required by lender |
| Land survey | Buyer | Depends on lender requirements |
| Lender fees | Buyer | Includes origination, processing fees, discount points |
This table shows who commonly pays what in a typical sale, but every sale works differently. Some sellers may pay all closing costs in exchange for a higher sale price that still falls within the home’s appraised value. Real estate agents may refer to this as seller concessions. In slow markets, a seller may make concessions even without increasing the sale price.
Other times, a lender will cover some or all of a loan’s closing costs in exchange for a higher interest rate on the loan.
In any case, the buyer should make plans and negotiate buyer costs before going under contract with a seller and before applying for the mortgage.
...in as little as 3 minutes – no credit impact
Who pays real estate commissions?
Traditionally the seller, but find out for sure.
For a $400,000 home, a 6 percent real estate commission totals $24,000 which would be split between the buyer and seller agencies.
Traditionally the seller pays this full commission by pricing it into the home. Real estate commissions are often the most expensive seller closing cost.
Recent court cases have successfully challenged this assumption. Now buyers should make sure they understand whether the seller plans to cover this cost before going under contract.
This is especially important for a house that’s for sale by owner instead of being listed by an agent.
Who pays escrow fees?
Negotiable.
An escrow service coordinates and times all the little transactions that make a home purchase work. This ensures both parties meet the terms of their contract before receiving payment.
The fee for this professional service usually costs hundreds of dollars but may cost more for more complex transactions.
This expense can be negotiable or split between the buyer and seller.
Who pays for the home inspection?
The buyer.
Buyers should pay for this. The home inspection provides information the buyer needs to make informed decisions about the property.
A home inspector should check out the home from its foundation to its roof vents, going beyond the simple checklist that’s included in an appraisal which exists to find the value of the home and make sure it’s safe.
Inspections could range from $400 to $1,000 or higher for large, unique homes.
Who pays for the appraisal?
The buyer.
A home appraisal, ordered by the buyer’s lender, confirms the home’s market value. The lender typically passes the appraisal fee along to the buyer.
Buyers or sellers can order their own appraisals, but mortgage approval will hinge on the value assigned by the official appraisal. A home loan cannot exceed the home’s appraised value, so if the appraisal comes in too low, the buyer and seller may need to renegotiate the price.
Who pays for a land survey?
The buyer.
A land survey confirms the property’s boundaries. A survey can also show whether a neighbor’s fence or driveway encroaches on the property.
Lenders and title companies often require surveys to identify any potential property disputes in the future.
Typically, the buyer pays for the land survey if one is needed.
Who pays for title insurance?
The buyer, though the seller can help.
The home’s title search, completed during the closing process, looks for ownership disputes, but it can’t find disputes that don’t exist yet or that were never properly recorded.
If title disputes come up later, title insurance protects homeowners and their lenders from losing money. If an heir to a previous owner of the home can prove they inherited the property, for example, title insurance could cover legal fees needed to sort out the problem.
The mortgage lender will require the home buyer to pay for the lender’s title insurance policy which lasts until the mortgage balance is paid off. The homebuyer can buy their own title insurance coverage which lasts as long as they own the property. Or the home seller can pay for this policy on the buyer’s behalf.
Who pays for a home warranty?
Either party can buy an optional warranty, but usually the seller pays.
A home warranty could lower home maintenance costs. It sets up a service plan for appliance repairs and replacements and can include repairs needed to the home’s roof, plumbing, electrical, or HVAC systems.
A home warranty isn’t required. Sellers may buy one to attract buyers and allay their fears about the cost of repairs, especially if they’re selling an older home. A seller-paid warranty may last for the first year. After that it’s up to the buyer to renew it.
Who pays real estate transfer taxes?
Usually the seller.
Much like a retail sales tax, real estate transfer taxes — also called documentary stamp taxes, conveyance taxes, or deed transfer taxes — are charged by local or state governments when ownership changes hands. A tax of 2 percent, for example, would add $8,000 to the sale of a $400,000 home. A tax of 0.25 percent would add only $1,000 to the same sale.
Tax rates vary a lot by location. Not every state charges this tax, and within many states, the tax varies by city and county. Your real estate agent should know about transfer taxes in your city or county.
Typically, the seller pays this fee, along with the real estate commissions, out of proceeds from the sale.
Who pays property taxes and insurance premiums?
Both parties.
The seller should cover property taxes, home insurance premiums, and HOA fees up until the property changes hands. If closing day is April 30, for instance, the seller should pay taxes, premiums, and fees due up until that day.
On closing day, the new owner takes responsibility for these charges. Often, the buyer will pre-pay these fees at closing to cover the rest of the current year. The buyer will also need to pre-pay the mortgage interest that’s due between closing day and the day of the first mortgage payment.
Who pays attorney fees?
The buyer.
Closing attorneys or title agents in some states oversee the closing process. The buyer typically pays for this service.
FAQs about who pays for what when selling a house
What costs do buyers and sellers actually pay at closing?
Before closing, buyers and sellers should already know who’s paying which fees. The Closing Disclosure or settlement statement should break down these charges. Buyers generally pay expenses charged by their lender, including the appraisal, loan origination fee, credit report fees, lender’s title insurance, and recording fees. Sellers typically pay real estate commissions, transfer taxes, and prorated property taxes.
Do cash buyers still have to pay closing costs?
Yes. Cash buyers won’t pay lender’s fees, but they may still need to pay for their own title insurance policy, escrow fees, recording fees, and inspections.
Are down payments included in closing costs?
No. A down payment is separate from closing costs. The down payment is part of the home’s purchase price. Closing costs pay for the professional services needed to complete a real estate transaction.
Transparency removes the mystery about who pays what
Closing costs are a big hurdle, especially for first-time home buyers. Collectively, average closing costs could total up to 5 or 6 percent of the home’s purchase price, exceeding the size of the down payment for some buyers.
Knowing who pays which charges should help demystify the process of buying or selling a home.
Working with a transparent lender can also remove the mystery about fees needed to close a loan. Better Mortgage’s digital lending process, for example, seeks to help buyers understand where they are in the process and how much they’ll need to spend out of pocket to close the loan.
This process begins with a pre-approval that can show results in as little as three minutes with no hard credit check required.
...in as little as 3 minutes – no credit impact