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Understanding Who Pays Closing Costs in NC

Posted by Landmark Concierge on Monday, February 14th, 2022 at 2:09pm

Understanding Who Pays Closing Costs in NC

There is usually a long list of questions when it comes to any real estate transaction. Often leading the way, right after inquiries about the purchase price, are the questions aimed at understanding who pays closing costs in NC. The seller and buyer each cover a portion of the closing cost and may compromise on a few items to close the deal.

In North Carolina, both the seller and the buyer generally pay some portion of closing costs. The guidelines are standard statewide so a buyer and seller in Charlotte will have a similar list of closing cost fees as someone in Cashiers and throughout Western North Carolina. The specific amounts that each side is expected to cover in the transaction depend on the terms of the contract; what was negotiated and agreed upon by both sides. Any last-minute changes of who will cover a cost could jeopardize the entire process.

One of the goals of a real estate professional is to assist each client with understanding who pays closing costs and how the overall process works. Whether a client is purchasing a forever home, buying a vacation home or selling a luxury property, closing costs are an important step and requires a serious conversation to explain the costs to ensure everyone understands and is on the same page.

Who pays closing costs in NC buyer or seller?

Paying a share of closing costs is the responsibility of both a buyer and a seller in North Carolina. The list of closing costs varies somewhat for each side. However, there are several items that both will pay. A good rule of thumb for sellers is to be prepared to cover the transfer of taxes, commissions, and other administrative fees at the closing. On the other side, buyers have to contend with paying fees associated with a mortgage ranging from lender fees to inspections and appraisals.

Buyers and sellers should look to their Realtor to answer questions about closing costs. Since every real estate sale or purchase is different, the Realtor will be able to explain specifics about a transaction and assist the client through the process. Areas like Western North Carolina attracts out-of-state buyers of investment properties who need to understand the closing process.

Realtors realize the topic of closing costs can be confusing and concerning for clients – buyers and sellers -- to understand how much they will owe or how much to expect as a final profit. Most real estate professionals caution clients to separate emotions and finances when it comes to real estate. And this bodes true especially at closing where a seller is adamant about not covering a cost, and the buyer ends up walking away. Make sure to understand which party will pay what is on the list of closing costs.

What do closing costs include?

First, it’s essential to understand that closing costs are based on the final price set to purchase the property. In addition, several other variables are itemized into the closing cost total.

Basic closing costs both Seller & Buyer pay include:

  • Property Appraisal

  • Title Search

  • Inspections

  • Title Insurance

  • Recording Fees

  • North Carolina Transfer Tax

The detailed list of closing costs in North Carolina covers a wide range of items essential to the sale and purchase of any property. There may be some of those costs that can be negotiated, and a real estate broker will be able to provide advice as needed.

What are 3 typical closing costs?

There is much information to understand about closing costs so that as a buyer or seller, you are well informed and not caught off guard and unprepared. Getting a handle on the basics related to closing costs is an excellent place to start.

Aside from the fees paid to the lender and the amount used as a down payment, the bulk of the additional fees listed as closing costs are for third-party services, to determine the market value, verify the condition of the property and make sure the sale can proceed without any related legal issues.

  • Appraisal – estimates the current market value of a property

  • Title Insurance – makes sure the property can be sold or purchased legally

  •  Inspection – identifies if there are any issues with the property that should be repaired

Carol Wilson, Broker-In-Charge & General Manager with Landmark Realty Group, said buyers often want to skip having a survey completed which can be expensive depending on the property.

“Surveys are considered by some as absolutely essential and others as an unnecessary expense,” Wilson said. “However, situations arise that could have been avoided had a survey been completed. Encroachments, easements, prior errors and setback lines are examples of things that can be discovered and are the sellers' responsibility to correct prior to closing.”  

Wilson explains that the buyer’s broker is responsible for making their client aware of inspections and recommending what they should consider before closing.

“We cannot recommend one service provider over another but can supply service providers to choose from,” she said. “Typically, inspection costs, including the home inspection, are paid for directly by the buyers and outside of closing.” 

How much is closing fees in NC?

Since the majority of closing costs are based on purchase price of the property, the total closing fees in North Carolina generally average between 2- 5% out of pocket for the buyer.

The seller can deduct the lion’s share of their closing costs from the proceeds of the sale. So unlike the buyer who has to cover expenses upfront, sellers may walk away with a little less, on average about .08 to 2% less than the final sale price.

Which closing costs are paid by the buyer?

Buyers planning to have a mortgage on a property must contend with several related fees due at closing. This set of fees is required by the lender issuing the mortgage.

Closing costs for buyers may include:

  • Loan origination fee

  • Survey

  • Property insurance

  • Interest – pre-paid daily on loan

  • Escrow amounts

Property taxes and attorney fees are a couple of the additional fees the buyer will need to pay at closing. Buyers should also be prepared to pay a list of smaller fees ranging from ordering a credit report to the fees charged to record and file the transaction with the proper governmental offices.

Wilson adds, “being excited about closing and being presented with multiple pages of numbers everywhere can be confusing and concerning. Helping the buyer understand the breakdown and how much they owe or will receive is all part of our work, “Wilson said. “Knowing that any questions they have will be answered by their closing attorney or their Realtor is just part of the journey through buying and selling real estate.”

Can you negotiate closing costs?

In purchasing a property there is room to negotiate closing costs or at least some of them. The seller may be willing to cover some additional fees if it will get the property sold faster to suit their timeline or any host of reasons.

However, there are some closing costs that will be paid directly to the lender or to cover fees charged by a third party to satisfy conditions of the loan such as appraisals, credit reports, inspections and insurance. If planning to negotiate closing costs, do so with the advice and assistance of a real estate professional who will be an expert negotiator on behalf of clients.

How can I avoid paying closing costs?

Several strategies can help buyers avoid paying closing costs. So now that you are paying close attention, there is no magic wand or fairy godmother to glide in and make the fees disappear. However, if a couple of fees on the list can be avoided, that will be a win!

Timeline – timing is critical when it comes to closing costs. Aim to close at the end of a month which adds up to saving on the daily interest assessed to cover the first few weeks. It may not seem like a lot, but that can add up to several hundreds of dollars that can be spent elsewhere.

Is appraisal included in closing costs?

Yes, an appraisal is included on the list of closing costs for buyers. Remember, the appraisal is required to provide an accurate pulse of the property’s current market value.  The cost of an appraisal can range from $300 to near $500. However, the appraisal results can impact the amount of a mortgage loan and other factors.

Do cash buyers pay closing costs?

Even when paying cash, the buyer still must cover all associated closing costs unless the seller has agreed to chip in additional funds. However, the fees may be lower since a mortgage is not attached to the list of fees and will be whittled down.

Keep in mind that every real estate situation is different so there may be a few tweaks along the way to closing on a property.

Learn How to Handle Closing Costs with Landmark Realty Group

Learn How to Handle Closing Costs with Landmark Realty Group

Here in North Carolina, all real estate closings are conducted by licensed attorneys in accordance with state law. In addition, buyers cannot receive the keys to their new home until the transaction is recorded with the county. So the closing process is not complete until all documents have been signed.

However, Wilson points out that if there is a delay in recording, buyers must exercise patience while they wait, “I generally recommend scheduling closings on a Tuesday, Wednesday or Thursday and not around a holiday because if there is a delay, they are waiting over the weekend until the courthouse opens again. Thankfully, electronic recordings are becoming more and more frequent now.”

The expert brokers with Landmark Realty Group understand the intricate details of closing costs in North Carolina and can educate clients about each of the fees outlined in the disclosure statement.

Maximize a great return on those closing cost dollars with a stunning property listed with Landmark Realty Group.  Work closely with a broker who knows the area and what it takes to close the deal. We specialize in North Carolina mountain real estate on the Highlands-Cashiers Plateau, and the surrounding areas of Lake Toxaway, Lake Glenville and Sapphire Valley.

Contact any Landmark real estate broker to discover the great communities in the region, and choose from a condo/townhouse, featured estates or land.

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