Who Pays For What In A Real Estate Transaction?

Who Pays For What In A Real Estate Transaction?

California 55 Plus
California 55 Plus
Published on October 26, 2022

Who Pays For What In A Real Estate Transaction?

Who Pays For What In A Real Estate Transaction?

A real estate transaction involves a multitude of costs to be paid by either the seller or the buyer. Some of these are paid before the closing and some are required to be paid on the closing only. Deciding who is going to pay for which costs is not always set in stone and can be negotiated each time differently while writing the purchase agreement.

Having said that, sometimes it is important to note that some costs are typically expected to be paid by one party. For example, in most cases the buyer will pay for the home inspection since it is the buyer who will benefit if the home inspector finds some fault with the property which enables the buyer to negotiate a lower price. If on the other hand a seller was paying for a home inspection report, the potential of being influenced and obtaining a misleading report is there.


Even though it is up to the negotiating parties to decide who pays for what, it is important to consider and be aware of the industry standard before finalizing the real estate purchase transaction. Some of the most common real estate fees and who pays them are included below:


Escrow fees in a real estate transaction are typically divided in half. The seller and the buyer pay 50% – each to pay their own.


These fees can vary depending upon the area and the agent or attorney in question and are paid at the closing usually. When only a single party is being represented by the attorney or agent, they have to pay for these fees. In case both the seller and buyer are using the same attorney or agent to perform the closing, they can negotiate and split the fee evenly.


This is a fee paid at the closing and is usually paid by the seller upon successful completion of a transaction.


Fees required for appraisals and borrowing funds from lenders are usually required to be paid by the buyer and are paid at the closing typically.


Fees associated with environment audits, home and structural inspections, are paid up-front and are mostly paid by the buyer. Sellers can sometimes pay for these before listing the property in order to make it more attractive and entice more buyers.


In most cases, the buyer will pay for the lender’s title insurance cost and the seller pays for the owner’s policy. In some cases, however, the buyer will have to pay title insurance for himself and the lender. This is usually paid at the closing as a one-time fee.


Taxes and property insurance fees are prorated as of the date of closing in most purchase agreements.


Fees for preparing the necessary documentation for transfer of title to the seller are usually paid by the seller at the time of closing. Fees taken by the county for recording documents into public record vary according to sale price, the value of mortgages and the number of documents involved.

This is not a complete list but it does cover the most common costs associated with a real estate transaction. With a little extra effort and proper knowledge, you can always negotiate these costs and decide who pays for what. For more information on real estate transactions and what to look for, contact an experienced real estate agent today!

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