Being a home seller, it’s important you know not only the process of selling but also potential seller expenses so that you are prepared for receiving an offer, but also prepared financially to make your next move. Closing costs can be a sticking point in real estate transactions so it’s important you know who pays closing costs and what can be negotiated.

Who Pays Closing Costs?

Understanding the financial aspects of the home selling process ensures that you know an estimate of your net proceeds. Net proceeds or equity from your home sale is what you can plan on to use for a down payment on the next home you purchase. It’s possible you will not be purchasing a new home once your current home sells, but it’s important to know what you could make from the sale of your home.

When do I find out How Much I owe in Closing Costs?

During the seller consultation, your Real Estate agent should give you a sample of possible expenses. The closing costs are an area of negotiation in almost all real estate transactions. Something to consider, your buyer will have their closing costs and you will have seller closing costs. Depending on the area you live in, the standard for who pays what can vary greatly. Refer to your Realtor for the standard in your area. In Minnesota, it’s customary for the seller to pay the closing costs for the buyer as well as pay closing costs for the selling side. This, however, is not a steadfast rule and can be negotiated. The buyer is usually charged 3% of the purchase price for the loan they are obtaining as closing costs.





Does the Buyer Pay Closing Costs?



The buyer closing costs can include pro-rated taxes, HOA fees, points to reduce the interest rate, just to name a few. In a seller’s market, the buyer will want to make their offer as competitive as possible, closing costs are usually the first thing to be removed from a purchase agreement in a multiple offer situation or competitive market. Even if the buyer doesn’t have all the funds to pay cash for the closing costs a simply counteroffer to the buyer can include the 3% the buyer needs, and a healthy bottom line can be a good win-win situation.

How Much Will I Pay in Closing Costs?

Depending on the price point of the home you’re purchasing, you can expect a first-time home buyer to ask for the full 3% closing costs. Most first time homebuyers will be struggling to come up with their downpayment. The downpayment for a new home usually starts at 3% of the purchase price and depending on the financing the buyer prefers the downpayment can be up to 20% of the purchase price. The closing costs will be a fee on top of that 3-20% they plan to put down.


A move-up buy or sale of a larger priced home may not include closing costs at all. High-end homes are usually purchased with a conventional loan and have a buyer that plans to put a large amount of cash down on the home, so it would seem senseless for the buyer to encompass closing costs into the loan for the 30 years. They may choose to reduce the offer price by 3%, or if it’s a sellers market with high competition they may end up offering the seller full asking and taking care of their own closing costs. In a competitive market, the buyer may need to carry their own fees in order to be the winning offer.


Be aware as the market slows and changes so do the negotiations. Look to your Realtor to make sure you get the highest priced offer for your market. An experienced Realtor will know how far they can push the buyer to make sure you net the most money from your home sale.

What Do Closing Costs Include For Sellers?

Your Real Estate agent should outline all the fees for you during your seller consultation. Many fees are government fees, that you cannot avoid during a real estate transaction. The state deed tax is usually a percentage of the purchase price. A proration of your taxes will be included. Taxes are paid twice a year, or can be part of your escrow agreement and included in your monthly mortgage payment. However you pay them, you will be responsible for the payment of the taxes up to the date of closing and then the buyer will take over the next day. If you’re in arrears you will owe and if you have paid in advance you will receive a credit on the settlement statement.

A recording fee is included in your closing costs, that takes care of the deed and any other filings that need to be recorded. The closing fee from the title company and any contributions you have credited to the buyer would also be included in the closing costs.

If you had work done on the property that has not been paid, delinquent homeowner’s association fees, taxes or any liens on the property, these would also be included in the closing costs and on the settlement sheet. The fees are not limited to this list, it’s possible you would have additional fees based on what you agreed to during the purchase agreement.

If the city or county has imposed an assessment for street improvements, curbs and lighting. You may have a balance owed that has been assessed to your taxes. That balance will likely need to be paid in full in order to record the new deed and transfer title. The fees are not limited to this list, it’s possible you would have additional fees based on what you agreed to during the purchase agreement.

The fees are not limited to this list, it’s possible you would have additional fees based on what you agreed to during the purchase agreement and what type of real estate you are selling. Farm properties, building sites and more could potentially have additional fees associated with samples of well water, septic tests and soil testing.

For more information on selling your home for the most money, or scheduling a seller consultation, connect with The Herda Home Team at 612-807-4858, or email us to get started at

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