Who Pays Closing Costs in Oklahoma: Buyer vs. Seller

Closing costs are expenses incurred by buyers and sellers beyond the property’s purchase price during a real estate transaction. While some expenses are typically assigned to one party, the ultimate responsibility can be influenced by state-specific customs, local market conditions, and negotiation. This article details who typically pays these costs in Oklahoma.

Understanding Closing Costs and Their Purpose

Closing costs encompass various fees and services necessary for transferring property ownership, securing a mortgage, and ensuring a legal and valid transaction. These expenses ensure that the property title is clear, the loan is properly processed, and the transaction is officially recorded.

Closing costs include lender-related fees for loan processing and underwriting, and title and escrow fees for clear ownership and fund management. Government taxes and recording fees cover the official transfer and registration of the property. Real estate agent commissions and attorney fees compensate professionals for their services.

Common Costs Paid by Buyers in Oklahoma

Buyers in Oklahoma typically encounter a range of closing costs, often accounting for 2% to 5% of the home’s purchase price. These expenses are primarily associated with the loan process and ensuring the property’s suitability and legal transfer.

Loan origination fees are charged by the lender for processing the mortgage application and can range from 0.5% to 1.5% of the total loan amount. Appraisal fees, typically between $300 and $600, cover the cost of assessing the property’s market value for the lender. A credit report fee is also incurred to review the buyer’s credit history.

Buyers are often responsible for prepaid interest, covering interest from the closing date until the first mortgage payment. Funding for an escrow account is also required, holding funds for future property taxes and homeowner’s insurance premiums. The first year’s homeowner’s insurance premium is typically paid upfront by the buyer.

Lender’s title insurance, protecting the mortgage lender from title defects, is usually a buyer’s expense in Oklahoma, costing between $500 and $1,500. This policy is mandatory if the buyer is obtaining a loan. Recording fees are paid to the county to register the new deed and mortgage.

Home inspection fees, typically ranging from $300 to $500, cover professional assessments of the property’s condition, including specialized inspections like termite inspections. A flood certification fee determines if the property is in a flood zone. Attorney fees are also a buyer’s responsibility if retained.

Common Costs Paid by Sellers in Oklahoma

Sellers in Oklahoma generally pay a larger share of closing costs, often ranging from 6% to 10% of the home’s sale price, with a significant portion from real estate commissions. These costs are typically deducted from the sale proceeds at closing.

Real estate agent commissions represent the largest expense for sellers, typically ranging from 5% to 6% of the sale price. This commission is usually paid by the seller and then split between the listing agent and the buyer’s agent. The owner’s title insurance policy, protecting the buyer from pre-existing title defects, is customarily paid by the seller in Oklahoma, though this is negotiable. This policy typically costs between 0.5% and 1.0% of the property’s value.

Prorated property taxes are another common seller cost, covering the portion of the year the seller owned the home until closing. The documentary stamp tax, a real estate transfer tax, is a fee for legally transferring property ownership. In Oklahoma, this tax is $0.75 for every $500 of the home’s value and is customarily paid by the seller, though negotiable.

Sellers also pay any outstanding mortgage balance on the property, including accrued interest and any prepayment penalties. Recording fees may be incurred by the seller for releasing their mortgage. If the property is part of a homeowners association, prorated HOA dues until closing are the seller’s responsibility. Any judgments or tax liens against the seller must also be cleared at closing.

Negotiating and Allocating Closing Costs

While common practices exist for allocating closing costs in Oklahoma, many expenses are negotiable. The final agreement is documented within the purchase agreement. Market conditions can significantly influence this negotiation, with a buyer’s market allowing buyers to request more seller concessions.

Seller concessions are a common negotiation point, where a seller agrees to cover a portion of the buyer’s closing costs, such as a percentage of the purchase price or a fixed amount. This can include contributions towards title insurance or inspection fees. In a seller’s market, buyers may have less leverage to request such concessions.

Some lender-specific fees, like loan origination fees, are generally fixed by the lender and not negotiable. However, fees for third-party services, such as appraisals or surveys, may be negotiable. Real estate agents guide clients through negotiations, advising on customary practices and potential adjustments.