There are a variety of complex legal and financial issues involved in a residential real estate transaction. Buyers and sellers will both need to meet multiple requirements, and as they get closer to the date where the transaction will be finalized, various concerns can arise that may affect the sale. Closing costs are one issue that the parties to a transaction should be aware of, and buyers and sellers should be sure to understand what costs they will be required to pay.

Typical Closing Costs

Multiple people or companies will be involved in a real estate transaction, and there are costs for the services they provide. These costs must usually be paid by the closing date. While certain costs may be assigned to the buyer or the seller, the parties may negotiate the terms of their purchase contract to address these issues, such as by agreeing that the seller will be responsible for paying certain costs that would usually be paid by the buyer.

Closing costs may include:

• Home appraisal - The buyer's lender will want to determine the actual value of the home to ensure that the amount of the mortgage loan is appropriate. Buyers are usually responsible for paying an appraiser's fees.

• Home inspection - During the closing process, the buyer will have a professional inspector come to the property to identify any defects or issues that may need to be repaired. While the buyer will usually pay the inspector's fees, the seller will usually be required to pay for repairs of any defects that are uncovered. Buyers and sellers may negotiate how these matters will be paid for, such as by adjusting the home's purchase price or having the seller cover some of the buyer's closing costs.

• Title search and survey - A search of public records can determine whether there are any issues that may prevent the sale of a home, such as liens on the property. A survey will verify the legal boundaries of the property. The seller is usually responsible for paying the costs of these services.

• Loan-related fees - Buyers will usually be required by their lender to pay application fees, as well as loan initiation and origination fees.

• Title insurance - These types of insurance policies provide protection in case title issues are discovered that prevent the sale from proceeding. Buyers will be required to obtain a loan policy that protects their lender, and sellers will be required to pay for an owner's policy that protects the buyer.

• Homeowner's insurance - Buyers are usually required to pay for the first year of this type of policy at the time of closing.

• Property taxes - Buyers will be required to pay the full amount of property taxes for the year in which the transaction is completed, and the amount they pay is estimated based on the amount of property taxes paid the previous year. Sellers will be required to pay a prorated amount of property taxes for the portion of the year before the sale was completed, and this amount will be credited to the buyer.

• Commissions - The seller is usually responsible for paying the commissions earned by both the buyer's and the seller's real estate agents.

Contact Our South Side of Chicago Real Estate Attorney

If you are planning to buy a new home or sell your current home, The Marques Eason Law Group can provide you with representation throughout the closing process. We will make sure you understand the closing costs that you will be required to pay, and we will help you negotiate a purchase contract that will ensure that you can complete your transaction without any unexpected costs. To learn more about the services we provide, contact our Beverly residential real estate lawyer at 773-973-3755.

Sources:

https://www.nerdwallet.com/article/mortgages/closing-costs-mortgage-fees-explained

https://www.opendoor.com/w/blog/how-much-are-closing-costs-for-sellerclosing 

https://www.bankrate.com/mortgages/what-are-closing-costs/