Who Pays Closing Costs in Ohio? Buyers & Sellers

Closing costs represent various fees and expenses incurred beyond a property’s purchase price during a real estate transaction. Both buyers and sellers typically incur these costs, which are finalized at the close of the transaction. These costs can vary significantly depending on the transaction’s specifics and location within Ohio.

Buyer’s Share of Closing Costs

Buyers in Ohio typically encounter several categories of closing costs. Loan origination fees, which can range from 0.5% to 1.5% of the loan amount, cover the lender’s administrative costs for processing the mortgage. Appraisal fees, typically between $400 and $600, are paid to an independent appraiser to determine the property’s market value. Credit report fees, usually around $30 to $50, cover the cost of obtaining the buyer’s credit history.

Buyers are also responsible for costs related to title services. This includes title search fees, which verify the legal owner, and the lender’s title insurance policy, which protects the lender if a title defect emerges. Recording fees, often between $60 and $100 in Ohio, are paid to the county to officially record the new deed and mortgage. A survey fee, ranging from $400 to $800, may be required to confirm property boundaries.

Prepaid expenses also form a part of the buyer’s closing costs. This includes initial payments for property taxes and homeowner’s insurance premiums. Lenders often require an escrow account for these items. Buyers may also pay “points” to their lender, which are upfront fees paid to reduce the interest rate on their mortgage. Each point typically costs 1% of the loan amount.

Seller’s Share of Closing Costs

Sellers in Ohio also bear a distinct set of closing costs. Real estate agent commissions typically range from 5% to 6% of the home’s sale price and are usually split between the buyer’s and seller’s agents. Another common seller expense is the owner’s title insurance policy, which protects the buyer from future claims against the property’s title.

Sellers are generally responsible for prorated property taxes up to the closing date, paying the portion of annual property taxes for the time they owned the property. While Ohio does not have a statewide real estate transfer tax, some local jurisdictions may impose one, ranging from $1 to $4 per $1,000 of the sale price. Attorney fees may apply if the seller chooses to retain legal counsel for the transaction.

Sellers might also face costs for HOA fees if the property is part of a homeowners’ association. Any unrecorded liens or judgments against the property must also be cleared by the seller before the sale can be finalized.

Negotiating Closing Costs

Many closing costs in Ohio are subject to negotiation between the buyer and seller. Negotiation strategies depend on prevailing market conditions. In a seller’s market, sellers may be less inclined to offer concessions. Conversely, in a buyer’s market, buyers have more leverage to request that sellers contribute to their closing costs.

Sellers might offer credits towards a buyer’s closing costs as an incentive. This can sweeten a deal without directly reducing the advertised sales price. Buyers can ask sellers to cover certain fees. The overall purchase price can also influence negotiations, as a higher accepted offer might make a seller more willing to contribute to closing costs.

Both parties often compromise during negotiations, leading to a mutually agreeable distribution of costs. These agreements are formalized within the purchase agreement, outlining each party’s financial responsibilities before closing.

The Closing Process and Payment

The closing process is the final stage of a real estate transaction, where all financial obligations are settled and ownership is transferred. A significant document in this phase is the Closing Disclosure (CD), provided to the buyer at least three business days before closing. This document itemizes all credits and charges for both the buyer and the seller.

Funds for closing costs are typically transferred to a closing agent, such as a title company or an attorney, who manages the disbursement of payments. Buyers usually bring certified funds or arrange for a wire transfer to cover their portion of the closing costs. The closing agent then pays the various service providers, including the lender, appraisers, and title insurance companies, on behalf of the buyer and seller.

The closing appointment involves the final signing of numerous legal documents, including the deed and mortgage. Once documents are signed and funds are disbursed, ownership officially transfers. The deed is then recorded with the county recorder’s office, completing the transaction.