Who Pays Closing Costs in Georgia: Buyer vs. Seller
Navigate Georgia real estate closing costs. Understand which fees buyers and sellers typically pay and how these financial responsibilities are determined.
When engaging in a real estate transaction, understanding the various financial obligations beyond the property’s purchase price is important. These additional expenses, known as closing costs, encompass a range of fees and charges incurred to finalize the transfer of property ownership. Closing costs cover services provided by various parties involved in the transaction, such as lenders, title companies, and legal professionals. Both buyers and sellers face these costs.
Buyer’s Closing Costs in Georgia
In Georgia, buyers typically bear closing costs primarily associated with securing their mortgage loan. These costs generally range from 2% to 5% of the home’s purchase price. For example, on a $300,000 home, a buyer might pay between $6,000 and $15,000 in closing costs.
A loan origination fee is charged by the lender for processing the mortgage application, which amounts to 0.5% to 1% of the loan amount. Buyers pay an appraisal fee, between $300 and $600, to assess the home’s market value, a lender requirement. A credit report fee, a smaller charge, covers the cost of obtaining the buyer’s credit history.
Title insurance is a cost for buyers, the lender’s policy, which protects the lender against future title defects. Buyers also pay recording fees to the county to register the deed and mortgage, with a flat fee of $25 per filing for most real estate documents. Prepaid expenses, such as property taxes and homeowner’s insurance premiums, are collected at closing to establish an escrow account. Attorney fees for closing coordination and title examination are common for buyers in Georgia, as legal representation is required for real estate closings in the state. Buyers also incur inspection fees for general home inspections, ranging from $300 to $600, and HOA transfer fees if applicable.
Seller’s Closing Costs in Georgia
Sellers in Georgia incur closing costs, which often represent a larger percentage of the sale price than buyers’, ranging from 6% to 10%. The largest expense for sellers is real estate agent commissions, which range from 5% to 6% of the home’s sale price and are split between the buyer’s and seller’s agents.
Georgia imposes a Real Estate Transfer Tax, which the seller pays. This tax is calculated at $1.00 for every $1,000 of the sale price, plus an additional $0.10 for every $100. Attorney fees are common for sellers, covering services like preparing seller documents and the deed, ranging from $500 to $1,500. Outstanding mortgage balances must be paid off at closing, deducted from sale proceeds.
Sellers are responsible for prorated property taxes and HOA dues up to the closing date. Sellers may also face HOA transfer or documentation fees.
Negotiable and Shared Closing Costs
Many closing costs in a Georgia real estate transaction are subject to negotiation between the buyer and seller, or are commonly shared and prorated. The final allocation of these expenses is determined by the terms outlined in the purchase agreement. This flexibility allows parties to adjust financial responsibilities based on market conditions or individual circumstances.
Home warranty plans are often a point of negotiation, with either the buyer or seller agreeing to cover the cost, which typically ranges from $300 to $600. Specific repair costs identified during a home inspection can also be negotiated; the seller might agree to make repairs or provide a credit to the buyer at closing to cover these expenses. Certain attorney fees, particularly those not tied to a specific party’s obligation, may also be negotiated between the buyer and seller.
The owner’s title insurance policy, which protects the buyer’s equity, is another cost that can be negotiated, as it is not always a fixed responsibility of one party. Furthermore, prorated expenses like property taxes, HOA dues, and utility bills are frequently shared. These costs are divided proportionally between the buyer and seller based on the number of days each party owns the property during the billing period that spans the closing date.
Understanding the Closing Disclosure
The Closing Disclosure (CD) is a standardized five-page document that provides a comprehensive breakdown of all final financial aspects of a real estate transaction. It itemizes every closing cost and clearly indicates whether the buyer or seller is responsible for paying each fee. This document serves as the definitive record for the final cost allocation.
Buyers typically receive their Closing Disclosure at least three business days before the scheduled closing date. This mandated timeframe allows buyers to thoroughly review the figures, compare them to the initial Loan Estimate, and address any discrepancies with their lender or real estate professional before finalizing the transaction. While the buyer receives the official Closing Disclosure directly from their lender, the seller also receives a similar settlement statement, often referred to as a “Seller’s Closing Disclosure” or ALTA Settlement Statement, detailing their specific debits and credits. This document’s purpose is to provide transparency and ensure both parties have a clear understanding of the financial responsibilities before the transfer of ownership is complete.