When buying or selling a home, many people focus primarily on the sale price. However, an important piece of the transaction puzzle that often surprises both parties is closing costs. These are the fees and expenses that must be paid at the end of the real estate transaction—and they can add up quickly.
At Spotlight Realty, we believe in equipping our clients with the knowledge they need to feel confident at every step of their real estate journey. Whether you're a buyer or a seller in the Raleigh-Durham area, understanding closing costs will help you plan ahead, avoid surprises, and negotiate more effectively.
What Are Closing Costs?
Closing costs are the various fees and expenses incurred during the final stages of a real estate transaction. These can include lender fees, title charges, property taxes, legal fees, and more. These costs are typically paid at the closing table when ownership officially transfers from the seller to the buyer.
The total amount can vary significantly based on location, property value, loan type, and negotiation terms, but closing costs generally range from 2% to 5% of the home’s purchase price.
Closing Costs for Buyers
As a buyer, you can expect to pay a variety of fees associated with financing, legal processing, and property services. Here are the most common closing costs for homebuyers:
1. Real Estate Agent Commission
A percentage of the sale price of the property determined by you and your agent. Sometimes, the sellers of a property will also contribute to this commission.
2. Loan Origination Fees
Charged by the lender for processing the mortgage. This fee typically ranges from 0.5% to 1% of the loan amount.
3. Appraisal Fee
Covers the cost of hiring a professional appraiser to determine the property’s value. This is usually required by the lender and ranges from $400 to $700.
4. Credit Report Fee
A small fee (around $25 to $50) to pull your credit report as part of the loan approval process.
5. Title Search and Title Insurance
Ensures there are no outstanding claims on the property and protects the buyer (and lender) from title-related issues. Costs vary but generally total between $500 and $1,500.
6. Home Inspection Fee
Though not always considered part of official closing costs, a home inspection (typically $300 to $600) is often paid before closing.
7. Recording Fees
Paid to the local government to legally record the deed and mortgage documents. These vary by county but generally fall in the $100 to $300 range.
8. Prepaid Taxes and Insurance
Buyers may be required to prepay several months' worth of property taxes and homeowner’s insurance into an escrow account.
9. Attorney Fees (if applicable)
In North Carolina, attorney involvement is common. Buyers usually pay legal fees for contract review and the closing itself.
10. Escrow Fees
If an escrow company manages the closing process, this fee (usually split between buyer and seller) may apply.
Closing Costs for Sellers
Sellers also face their own set of costs, typically deducted from the proceeds of the home sale. Here’s what sellers can expect:
1. Real Estate Agent Commission
A percentage of the sale price of the property determined by you and your agent. Sellers can choose to pay their agent only, or, for a more robust marketing approach to attract more buyers, sellers can choose to contribute to the cooperating agent’s commission as well.
2. Attorney Fees
In North Carolina, sellers may also be responsible for attorney fees to prepare the deed and oversee the closing.
3. Title Fees
The seller may pay for the owner’s title insurance and any related title services. This can vary based on the transaction.
4. Prorated Property Taxes
Sellers are responsible for their portion of property taxes up until the closing date. This amount is prorated and settled at closing.
5. Outstanding Liens or HOA Dues
Any unpaid HOA fees, special assessments, or liens must be settled prior to or during closing.
6. Seller Concessions (if negotiated)
If the seller agrees to help cover the buyer’s closing costs as part of the negotiation, this amount is deducted from the proceeds.
7. Home Warranty (optional)
Some sellers offer a home warranty to make their listing more attractive. This can cost between $400 and $700.
Who Pays What? Negotiation Is Key
In some cases, closing costs are negotiable. For example, a buyer may request that the seller cover a portion of their closing expenses—especially in a buyer’s market. Conversely, in a seller’s market like Raleigh-Durham has often been, buyers are more likely to shoulder their own costs to keep their offers competitive.
Your Spotlight Realty agent will help you understand which costs are standard, which are negotiable, and how to structure your contract for maximum benefit.
How to Prepare for Closing Costs
For Buyers:
- Request a Loan Estimate early in the process to see a breakdown of fees.
- Set aside 2% to 5% of the home’s purchase price for closing costs.
- Ask your lender about programs that may offer credits or assistance.
For Sellers:
- Review a Net Sheet from your agent to understand your estimated proceeds.
- Factor in all seller expenses before agreeing to price reductions or concessions.
- Be upfront about any liens, HOA dues, or repair credits that may affect your net.
Closing Day: What to Expect
On the day of closing, both parties will meet (in person or virtually) to sign all necessary documents. The buyer will bring certified funds or wire the amount owed, and the seller will transfer the title.
Final payments for all closing costs will be settled at this time, and the buyer will officially take ownership of the property. In North Carolina, an attorney typically facilitates this process.
Let Spotlight Realty Help You Navigate Closing With Confidence
Closing costs can feel complex, but they don’t have to be stressful. With the right agent and expert guidance, you can approach closing day feeling informed and prepared.
At Spotlight Realty, we specialize in guiding both buyers and sellers through every phase of the transaction—from listing and offer acceptance to closing day. We help you understand your costs, avoid surprises, and protect your financial interests.
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Have questions about what closing costs mean for your next move? Contact us today and let Spotlight Realty be your trusted partner in Raleigh-Durham real estate.
