Who pays closing costs — the buyer or the seller?
Both do. Buyers pay lender, appraisal, and escrow costs (2–5% of price); sellers pay agent commissions plus transfer taxes and often the owner's title policy (6–10% total). Everything is negotiable — seller concessions can shift thousands to the seller's side.
Who customarily pays what
| Cost | Buyer | Seller |
|---|---|---|
| Loan origination, appraisal, credit report | ✓ | Buyer's mortgage costs |
| Agent commissions | — | Seller traditionally; negotiable since 2024 |
| Transfer taxes | Varies | Seller in most states, split in some |
| Owner's title policy | Varies | Seller in TX/FL, buyer in many northern states |
| Prepaid taxes/insurance | ✓ | Buyer's own future bills |
How to read this table
- With 5 reference points in the "who customarily pays what" table, the fastest way to use this page is to find the closest row, take its buyer, then stress-test it ±30% before you build a plan on it.
Context
Custom varies by state — in Texas and Florida sellers usually buy the owner's title policy; in much of the Northeast the buyer does. In a buyer's market, asking for a 2–3% seller concession toward closing costs is common and often beats an equivalent price cut for cash-strapped buyers, because it reduces cash due at closing dollar-for-dollar. Loan programs cap concessions: 3% (conventional, low down payment) up to 6% (FHA) of the price.
What moves this number
Financing terms
Rate, down payment and amortisation drive cash-on-cash return more than purchase price does. The same building can cash-flow or bleed depending on the loan.
True operating expense ratio
Management, insurance, tax, maintenance, vacancy and capital reserve typically consume 35–50% of gross rent. Models that skip reserves overstate returns badly.
Vacancy and turnover
One 45-day vacancy plus a turn can erase a year of thin cash flow. Underwrite 5–8% vacancy even in tight markets.
Local regulation
Rent rules, short-term rental caps and licensing requirements change the achievable revenue of an identical property between neighbouring cities.
Methodology
Customary allocations from state closing practices and 2024–2026 MLS norms post-NAR settlement; concession caps from Fannie Mae/FHA guidelines.
Assumptions and caveats
- Returns exclude appreciation and principal paydown unless a row states otherwise.
- Local tax, insurance and regulation can move these figures by several points in either direction.
- This page was last reviewed on 2026-10-01. Ranges are updated as new data lands, so re-check before using them in a contract or a plan.
- Use these numbers as a starting range, not a guarantee — your own historical data always beats a benchmark.
Frequently asked questions
Who pays closing costs — the buyer or the seller?
Both do. Buyers pay lender, appraisal, and escrow costs (2–5% of price); sellers pay agent commissions plus transfer taxes and often the owner's title policy (6–10% total). Everything is negotiable — seller concessions can shift thousands to the seller's side.
Where do these numbers come from?
Customary allocations from state closing practices and 2024–2026 MLS norms post-NAR settlement; concession caps from Fannie Mae/FHA guidelines.
How can I estimate my own number instead of using a benchmark?
Use the Closing Costs Calculator on RevenueLab — it takes your own inputs and returns a figure specific to your setup, which is always more accurate than a published range.
Model your own numbers
Related reading
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Last updated 2026-10-01.