who pays closing costs?
Are you thinking about buying or selling a house and wondering if you’ll have to pay closing costs?
We’re going to answer that question right now!
Hi, I’m Heather Wright with RE/MAX Concepts. I’m a REALTOR in Des Moines and I can help you understand who pays closing costs.
The short answer is that BOTH the buyer and seller pay for their OWN closing costs.
Buying and selling real estate isn’t cheap. And it shouldn’t be - you’re talking hundreds of thousands of dollars!
Buyers will primarily have their loan costs and pre-paids to pay when they purchase a house.
(Of course, closing costs are much lower if you pay in cash.)
But then sellers have closing costs too. In the Des Moines area it’s customary for a seller to pay the Realtor professional fees, plus their tax pro-ration, and several other smaller fees.
So, what happens if the buyer doesn’t have a lot of extra money?
Maybe they’re getting 100% financing or they’ve got JUST ENOUGH cash for their down payment?
We’ve got to get creative with the math.
I always tell my buyers that they’re going to pay their own closing costs. Either they’re going to pay them out of pocket, or finance into their loan.
And, I tell all my sellers the same thing. You’ll have to pay your own closing costs BUT you might FEEL like you’re paying your buyers closing costs.
For example, let’s say you’ve got a house for sale for $200,000.
A buyer comes along and offers to pay you $195,000 for the house and they also negotiate that you pay $3,000 for THEIR closing costs.
This is usually where sellers draw the line “I WILL NOT PAY THEIR CLOSING COSTS - NO ONE PAID MINE!”
Trust me, this is where the creative math comes in.
In this case, if you were to accept the offer of $195,000 with $3,000 in closing costs - you’re getting a NET PRICE of $192,000.
Perhaps you really wanted a sales price of $195,000. So the only thing you don’t like is that closing costs number. Well, if you countered them at $198,000 for a price and agreed to pay the $3,000 - then you’re going to have a NET price of $195,000!
If someone else came along and offered to pay you $195,000 with NO closing costs - it’s the exact same offer! So, you can see how the buyer is paying their closing costs in that situation.
Don’t get caught up in who is paying what. The buyer probably needs to finance the closing costs into their loan - and there’s nothing wrong with that.
Ultimately, as a seller, you’ll want to focus on your BOTTOM LINE or NET PRICE.
That’s it - now you know who pays closing costs when you buy or sell real estate in Des Moines.
Hopefully I can answer any questions you have about moving in Des Moines!