This blog post is part of the ongoing series in which we answer some of the most common questions among home buyers. Today’s question is: who pays for closing costs in Washington State, the buyer or seller?
The short answer is that both parties might end up paying some closing costs. In a typical real estate transaction, both the home buyer and the seller have certain costs they are responsible for. And it’s all negotiable.
Home buyers tend to encounter the largest number of individual fees and costs, especially when a mortgage loan is being used. But the seller is usually on the hook for the real estate agent commissions, and this can be greater than all of the buyer’s closing costs combined.
In-Depth: Who Pays Closing Costs in Washington?
The term “closing costs” refers to the various fees and charges a home buyer might incur when purchasing a house using a mortgage loan.
Actually, buyers can encounter closing costs whether they pay cash or use a home loan to buy a house. But those who use mortgage financing tend to have more costs on closing day, due to the lender’s fees that are included.
In Washington, the buyer’s closing costs can include the following:
- Home appraisal fee
- Mortgage origination fee
- Mortgage discount points / prepaid interest
- Prepaid home insurance premium
- Credit report fee
- Government recording fees
- Lender title insurance
- Escrow closing fee (buyers side)
- Click to see today’s real buyer’s side closing costs
Closing costs for sellers can include:
- Real estate agent commissions
- Owners title insurance
- Escrow closing fee (sellers side)
- Any property taxes that are due
- Government excise taxes in some cases
- Prorated homeowners association dues
As for who pays what closing costs in Washington State, this can vary from one transaction to the next. The terms of the deal are generally outlined in the real estate purchase agreement or contract, and that includes who will end up paying which closing costs.
What’s Your Real Estate Market Like?
The kind of real estate market you are in can also influence who pays what:
- In a buyers’ market where sellers are generally more eager to get an offer, they might be willing to pay some of the buyer’s closing costs.
- But in a sellers’ market, where there is high demand for housing but limited supply, sellers are generally less likely to pay for buyer closing costs.
By the way, when the seller agrees to contribute money toward the buyer’s closing costs, it’s referred to as a seller “concession.” Ask your real estate agent if such concessions are common in your local area.
Also keep in mind that it’s the seller who typically pays the real estate agent commissions. In some cases, sellers might be less willing to offer concessions since they are already covering the agent commissions. But again, all of this varies from one transaction to the next, and it largely depends on market conditions.
To recap: Who pays what closing costs in Washington State comes down to negotiations. But your negotiating ability will largely depend on the kind of real estate market you are in. Home buyers in Washington usually encounter more individual line-item closing cost expenses. But the seller might end up paying more money overall due to the agent commissions.
Need a loan? Will you need mortgage financing to buy a home in Washington State? We can help. Sammamish Mortgage has been serving buyers across the Pacific Northwest for more than 25 years. We offer a wide variety of mortgage products and programs with flexible qualification criteria. Please contact us today with any financing-related questions you have.