Who Pays for What in a Real Estate Transaction?

It Costs Money, so Who Pays?

There are several fees associated with the purchase or sale of real estate. The buyer tends to have more ‘fees’ because many are associated with their loan and called ‘loan fees’. The type of loan the buyer is utilizing will also set precedence on how fees are allocated.

Lender Fees

Lender fees will differ from lender to lender. An Agent can help a buyer to navigate through the fees and determine if they are on target or high in regard to the standard. Depending on the type of loan a buyer is  using there may be some ‘Non-Allowable’ loan fees that are charged to the seller. This is a factor when a buyer is utilizing a VA Loan. There are around $1300.00 in fees the buyer is ‘not allowed’ to pay on a VA Loan.

Title Company Fees

Title company fees are split between the parties in most cases. Typically, the seller will pay the Title Policy and the buyer will pay the Owner’s Policy for Title Insurance. The actual Closing Fee is split.

Agent Fees

In most cases, the seller has signed a listing agreement with a Brokerage specifying a certain fee to be paid to the listing broker. The listing agreement typically includes provisions for splitting the fee with any agent who brings the buyer for the property, regardless of agency relationship. In some cases the buyer pays the agent commission as set out in the Buyer’s Representation Agreement. This  would not occur without the buyer’s prior knowledge and may include instances concerning For Sale By Owner properties where a prior agreement to pay commission does not exist.

Inspections, Appraisals, and other Charges

Each contract is different and many items are negotiated within the transaction between the buyer and the seller. The Property Inspection is paid for by the buyer prior to closing. The appraisal (loan fee) and other required inspections such as the Survey and Termite Inspection are, in most cases, paid for by the buyer as well unless otherwise negotiated.

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About Toni Hedstrom

I am one half of Hedstrom & Stamm Home Solutions, a dynamic real estate team with emphasis on home marketing utilizing our exclusive Home Ready Program.