Understanding Closing Costs: Who Pays for What
- Scott Sweeney
- 4 minutes ago
- 4 min read
Breaking Down One of the Most Overlooked Parts of a Home Sale
So, you’ve found the perfect home (or buyer), the offer’s accepted, and you’re ready to close the deal. 🎉 But then bam! the final paperwork hits, and you see something called closing costs that make your jaw drop a little.
Don’t worry, you’re not alone. Whether you’re buying or selling, closing costs can feel confusing at first. Let’s break them down so you know exactly who pays for what and how to prepare.
🏡 What Are Closing Costs, Anyway?
Closing costs are the fees and expenses that come with finalizing a real estate transaction. Think of them as the “cost of doing business” when transferring ownership.
These typically range from 2% to 5% of the home’s purchase price, depending on the property, location, and loan type.
In Northern California, where homes can easily range from $500,000 to over $1 million, that’s a significant chunk so understanding them upfront can save you from surprises later.
💸 What Buyers Typically Pay
Buyers tend to shoulder more of the upfront costs, especially when financing is involved. Here’s what’s usually on their plate:
Loan origination fees – Charged by the lender for processing the loan
Appraisal fee – To confirm the property’s market value
Credit report & underwriting fees – Standard for all mortgage approvals
Title insurance (lender’s policy) – Protects the lender against ownership disputes
Home inspection & pest inspection fees – Common in NorCal’s older homes
Escrow fees (shared) – Often split, but buyers may cover the larger portion
Prepaid property taxes and insurance – Required by lenders before closing
Pro tip: Ask your lender for a Loan Estimate early on — it breaks down your expected costs line by line, so you’re never guessing.
🏠 What Sellers Typically Pay
Sellers have their own share of costs — but they’re mostly related to transferring the property.
Here’s what sellers in Northern California often cover:
Real estate agent commissions – Typically 5–6% of the sale price, split between agents
Title insurance (owner’s policy) – Protects the buyer’s ownership rights
Escrow fees (shared) – Usually split with the buyer
County or city transfer taxes – These vary by location (and can add up fast)
Outstanding property taxes or liens – Must be cleared before closing
Home warranty (optional) – Sometimes offered to sweeten the deal for buyers
Example: A seller in Elk Grove selling a $700,000 home might expect about $25,000–$35,000 in total closing costs, most of which comes from agent commissions and transfer taxes.
🤝 Negotiable Costs — The Fun Part
Here’s the good news: not everything is set in stone!
In many cases, buyers and sellers can negotiate who covers certain fees — especially if one party needs to make their offer more appealing.
Common negotiations:
Buyers asking for seller credits to offset loan or closing costs
Sellers offering to cover title or escrow fees to attract buyers
Split fees depending on how competitive the market is
Pro tip: In a buyer’s market, sellers are more likely to help with costs. In a hot seller’s market, buyers may need to shoulder more to win the deal.
🧭 The Takeaway
Closing costs might not be the most glamorous part of real estate — but understanding them can save you thousands and prevent last-minute surprises.
Whether you’re buying your first home in Sacramento or selling an investment in Rocklin, knowing who pays for what helps you budget smarter and negotiate stronger.
At the end of the day, it’s all about clarity and having the right agent and lender to walk you through every line of that final closing statement.
Scott Sweeney
Elk Grove Realtor
Serving Sacramento and beyond from the Bay Area to South Lake Tahoe
707 330 2324
CalBRE 01938720
About Scott Sweeney
SweeneySells
Full Time Realtor 13 Years +
Over 100 Families Served
Top 5% Producing Agent
Buying & Listing Specialist
Contract & Negotiation Ninja
CSUS Business & Marketing Graduate 2006
With quickly serving over a 100 families, Scott Sweeney has become a top 5% producing Realtor in the greater Sacramento area who has helped clients from the Bay Area to South Lake Tahoe. Scott has a Bachelor Of Science in Business Administration, with a concentration in Marketing from CSUS. His education, and extensive background in the hospitality, marketing, and real estate industries, have helped Scott to become one of the leading, and most sought after agents in the area.
Reach out to SweeneySells today, and take the first step towards your real estate goals!
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