Plan on closing costs of about 2%–5% of the purchase price if you’re buying, and roughly 6%–10% of the sale price if you’re selling. The seller’s number runs higher mainly because agent commissions have traditionally come out of their proceeds. Everything past that is a matter of your state, your loan, and what the contract says — which is a longer way of saying most of it is negotiable.
Two people can close on the same $400,000 house and walk away with wildly different bills. The buyer is paying to borrow money and verify the property; the seller is paying to sell and transfer it. Once you see the line items that way, the split stops feeling random. Here’s who pays what, what’s actually up for grabs, and how to pin down your own number before you sign.
What are closing costs, really?
Closing costs are every fee beyond the price of the home itself — loan processing, title work, the appraisal, government recording, prorated taxes, and the professionals who push the deal across the line. They land differently for each side. Buyers write a check (or wire) for most of theirs at the table, on top of the down payment. Sellers rarely pay out of pocket; their costs are subtracted from the proceeds before the wire hits their account.
That difference matters more than it sounds. A buyer needs cash on hand. A seller just needs enough equity to cover the deductions. Model both before you commit with a Closing Cost Estimator so the settlement statement holds no surprises.
Buyer vs. seller: how much are we talking?
Percentages are the honest way to compare, because the dollar amounts scale with price. Buyers are measured against the loan or purchase price; sellers against the sale price. These are typical U.S. ranges — your state can push you toward either end.
| Party | Typical range | What drives the number |
|---|---|---|
| Buyer | ~2%–5% of purchase price | Lender fees, title insurance, appraisal, prepaids, escrow deposits |
| Seller | ~6%–10% of sale price | Agent commissions, transfer taxes, buyer concessions |
On a $400,000 home, that’s roughly $8,000–$20,000 for the buyer and $24,000–$40,000 for the seller. Commissions are the swing factor on the seller side, and they’ve become far more negotiable than they were even a couple of years ago — so treat the top of that range as a ceiling, not a foregone conclusion.
Which costs does the buyer usually pay?
Buyer costs cluster around the mortgage and the due diligence that comes with it:
- Loan origination and underwriting — the lender’s charge to process and approve your mortgage.
- Appraisal and credit report — confirming the home is worth the price and that you’re good for the loan.
- Lender’s title insurance and title search — protects the bank’s stake, not yours.
- Prepaids and escrow deposits — prepaid interest, the first homeowners-insurance premium, and property taxes parked in an impound account.
- Recording fees, plus a share of transfer taxes in some areas.
- Inspection and, where used, a survey — optional on paper, non-negotiable in practice if you value your money.
Here’s the part first-time buyers miss: many of these are flat fees, not percentages. A $700 appraisal costs the same on a $250,000 condo as a $600,000 house — so as a share of the total, closing costs bite hardest at the lower end of the market.
Watch out: Since the 2024 NAR settlement reshaped how commissions work, the buyer’s agent is no longer automatically paid from the seller’s side by default. In many deals it’s now negotiated openly — and buyers may be asked to cover part of their own agent’s fee. Before you write an offer, ask your agent in plain language: who is paying you, and how much? The answer can move your cash-to-close by thousands.
Which costs does the seller usually pay?
The seller’s bill is dominated by the cost of selling and handing over the property:
- Real estate commissions — historically the single biggest line, and now the most negotiable one. How the buyer’s agent gets paid is on the table in a way it never used to be.
- Transfer or conveyance taxes — these vary enormously. Some states charge nothing; others take a real bite at closing.
- Owner’s title insurance where local custom puts it on the seller.
- Prorated property taxes and HOA dues through the closing date.
- Attorney or settlement fees in the states where a closing attorney runs the deal.
- Seller concessions — credits toward the buyer’s costs, negotiated deal by deal, common in a soft market.
One thing to keep straight: sellers also pay off whatever’s left on their mortgage from the proceeds, but that’s a loan payoff, not a closing cost. Don’t let it inflate your mental math on what selling actually costs.
Who customarily pays each line item?
Custom, not law — this varies by state, and anything marked negotiable gets shifted between the parties in the contract all the time.
| Line item | Usually paid by |
|---|---|
| Real estate commissions | Seller (increasingly negotiable) |
| Loan origination / underwriting | Buyer |
| Appraisal | Buyer |
| Lender’s title insurance | Buyer |
| Owner’s title insurance | Varies by state |
| Transfer / conveyance taxes | Varies (often seller) |
| Recording fees | Buyer (varies) |
| Prepaids & escrow deposits | Buyer |
| Prorated property taxes | Split at closing date |
| Seller concessions | Seller (credit to buyer) |
Can you actually get closing costs down?
Yes, and both sides have real levers. Buyers can ask for seller concessions, shop three or four lenders and compare the Loan Estimates side by side, and — where state law allows — pick their own title company instead of taking the one they’re handed. Those loan fees are not fixed; lenders quote them expecting you to push back.
Sellers negotiate commission terms and, in a hot market, ask the buyer to absorb costs that are customarily the seller’s. The catch is that every number moves with price, location, and negotiation, so a single estimate is nearly useless. Run two or three scenarios in a Closing Cost Estimator before you anchor on a figure. One genuine caveat worth keeping: whether a specific cost is deductible or gets added to your property’s cost basis depends on the item and how you hold the property — confirm those with a tax pro rather than guessing.
Frequently asked questions
Are closing costs paid upfront or at closing?
Mostly at closing. A few items — the appraisal, the inspection — get paid earlier because the work happens before closing day. The bulk settles when you sign.
Do closing costs include the down payment?
No. They’re two separate buckets. The down payment goes toward the price of the home; closing costs are the transaction fees stacked on top of it.
Can buyers roll closing costs into the mortgage?
Sometimes. Certain loan programs let you finance part of your closing costs, and lender credits can cover some in exchange for a slightly higher rate. Whether it’s available comes down to your loan type and lender.
Who pays the real estate agent commission?
Traditionally the seller, out of their proceeds. After the 2024 industry changes, the amount and structure are openly negotiable, and buyer-agent pay is increasingly discussed directly between the buyer and their agent. The terms live in the listing and purchase agreements.
Are closing costs tax-deductible?
A few items may be deductible or added to your cost basis; most are not. The rules differ for a primary residence versus an investment property, so check your specific situation with a tax professional.
How much are closing costs on a $400,000 home?
Roughly $8,000–$20,000 for the buyer and $24,000–$40,000 for the seller. Commissions, transfer taxes, and any negotiated concessions decide where you land in those ranges.
Keep your real estate finances closing-ready with Tabby
Whether you’re an agent tracking commission income or a 1099 pro juggling deal expenses, closing season is far calmer when the books are already clean. Tabby is AI bookkeeping built for self-employed and 1099 professionals — commissions, fees, and deductible expenses get categorized as they happen instead of piling up until April. Model the numbers with the Closing Cost Estimator, then let Tabby keep the income and expenses organized year-round. Start a free trial and walk into your next closing with tidy books.
