Who Pays Closing Costs in Georgia: Buyer vs. Seller

Closing costs are additional expenses incurred by both buyers and sellers during a real estate transaction, separate from the property’s purchase price. These fees are a collection of charges for various services required to finalize the transfer of property ownership. They can vary significantly depending on the location, the type of transaction, and specific agreements between the parties involved.

Understanding Closing Cost Categories

Closing costs encompass a diverse range of fees and expenses, typically grouped into categories based on the service they cover. Loan-related fees are charged by the lender for processing and underwriting the mortgage. These can include origination fees, along with charges for credit reports and property appraisals.

Title-related fees ensure the legal transfer of ownership and protect against future claims. This category includes charges for a title search and title insurance. Government recording fees are collected by local authorities to officially register the new property ownership and any associated mortgage documents. Additionally, costs like property taxes and homeowners insurance premiums are often collected at closing.

Typical Buyer Responsibilities in Georgia

In Georgia, buyers typically bear a significant portion of the closing costs, particularly those related to securing a mortgage. A major component for buyers includes loan origination fees, which can range from 0.5% to 1% of the loan amount. Buyers also pay for the appraisal fee, which assesses the property’s value, and credit report fees.

A specific cost for buyers in Georgia is the intangible tax, levied on new mortgage loans. This tax is calculated at $1.50 per $500, or $3.00 per $1,000, of the loan amount, and must be paid when the security deed is recorded. Georgia is an attorney-state, meaning a real estate attorney must oversee the closing process, and buyers often pay a portion of the closing attorney fees, which can range from several hundred dollars to over a thousand. Buyers also typically purchase a lender’s title insurance policy to protect the mortgage lender’s interest.

Typical Seller Responsibilities in Georgia

Sellers in Georgia are generally responsible for certain closing costs, with the real estate commission often being the most substantial expense. This commission, typically ranging from 5% to 6% of the home’s sale price, is paid to the real estate agents involved in the transaction and is usually split between the buyer’s and seller’s agents.

Another common seller cost in Georgia is the real estate transfer tax, which is imposed on the transfer of property ownership. The rate is $1.00 per $1,000 of the sale price, plus an additional $0.10 for every $100 or fractional part thereof. Sellers may also pay pro-rated property taxes and homeowners association (HOA) dues up to the closing date, ensuring these are current. Costs associated with clearing the property’s title, such as satisfying existing liens or preparing the deed, are also typically the seller’s responsibility.

How Closing Costs are Negotiated

While there are typical allocations for closing costs, many of these fees are negotiable between the buyer and seller. This negotiation often occurs as part of the overall purchase agreement. Factors influencing these discussions include prevailing market conditions, such as whether it is a buyer’s or seller’s market.

In a buyer’s market, sellers may be more inclined to contribute to the buyer’s closing costs to facilitate the sale. Conversely, in a seller’s market, buyers might have less leverage to request such concessions. The condition of the property and the overall attractiveness of the offer can also play a role in negotiations. Any agreed-upon adjustments to who pays which closing costs should be clearly documented in the real estate contract to avoid misunderstandings.