Closing costs are the transaction fees charged on top of the purchase price when a home changes hands. Buyers typically pay 2-5% and sellers pay 8-10% of the sale price. On a $400,000 home, that’s $8,000-$20,000 for buyers and $32,000-$40,000 for sellers.
Buyer Closing Costs
| Fee | Typical Range | Notes |
|---|---|---|
| Loan origination | 0.5-1% of loan | Lender’s processing fee |
| Appraisal | $400-$700 | Required by lender |
| Title search | $200-$400 | Verifies ownership history |
| Title insurance (lender’s) | $500-$1,500 | Protects lender’s interest |
| Title insurance (owner’s) | $500-$2,000 | Optional but recommended |
| Attorney fees | $500-$2,000 | Required in some states |
| Recording fees | $100-$500 | County filing fees |
| Transfer taxes | Varies | Some states/cities charge 0.5-2% |
| Prepaid taxes | 2-6 months | Escrow account deposit |
| Prepaid insurance | 12 months | First year premium upfront |
| Prepaid interest | Days remaining in month | From closing to month-end |
| Survey | $300-$800 | May be required by lender |
What’s negotiable: Loan origination fees, title company selection (shop around), owner’s title insurance rate, attorney selection. Seller concessions can cover some buyer closing costs (typically capped at 3-6% of price depending on loan type).
Seller Closing Costs
Agent commissions dominate the seller’s stack. Before assuming the 5-6% standard, it’s worth pricing out flat-fee MLS as an alternative — see Fizber flat-fee MLS vs. realtor on The Resale Trap for the cost and service comparison.
| Fee | Typical Range | Notes |
|---|---|---|
| Agent commissions | 5-6% of sale | Split between listing and buyer agents |
| Title transfer | $200-$500 | Varies by state |
| Transfer taxes | 0-2% | State and local |
| Prorated property taxes | Varies | For portion of year before closing |
| Repairs/concessions | $2,000-$10,000+ | Negotiated from inspection |
| Home warranty | $400-$600 | Often provided to buyer |
| Outstanding liens | Varies | HOA, mechanics, tax liens |
| Mortgage payoff | Balance + interest | Through closing date |
The agent commission structure changed following the NAR settlement in 2024. Buyer agent compensation is now negotiated separately rather than offered through the MLS. Total commission rates have declined slightly but still average 5-5.5% combined.
State-by-State Variations
Transfer taxes are the biggest wildcard. Some states charge nothing. Others add significant costs:
- No transfer tax: Alaska, Idaho, Indiana, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, Oregon, Texas, Utah, Wyoming
- Moderate (0.1-0.5%): Most states
- High (1%+): Connecticut (0.75-1.25%), Delaware (3-4% for some transactions), Washington DC (1.1-1.45%), New York City (1-2.625%)
The Total Transaction Cost Reality
When you combine buying and selling costs, the round-trip transaction cost of homeownership is 10-15% of the home’s value. On a $400,000 home, that’s $40,000-$60,000.
This is money that doesn’t build equity, doesn’t appreciate, and doesn’t come back. It’s the cost of entering and exiting the housing market. Any discussion of homeownership as an investment must account for these friction costs.
Use the HomeStats calculators to estimate your specific closing costs, and check state pages for property tax rates that affect your escrow requirements.
For the full analysis of transaction costs and how they affect the real return on homeownership, read The Resale Trap.