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Closing Costs 101

Lots of people tell me that they are surprised at the enormity of the closing costs involved in the sale or purchase of real estate. Astonished may be the right word, and incensed probably works even better. This is especially true for those people who have scraped and saved for years only to find out that they are still $10,0000, $20,000, $50,000 or more short when the closing costs are factored in. What are the closing costs for? Who gets the money? Why didn’t anyone warn me about this?

Closing costs are called closing costs because they are generally paid at the time of the closing. They fall into two categories. Those paid to a government entity, usually in the form of taxes, and those paid to the various professionals you hired at various stages of the transaction. These include your broker, your lawyer, the bank, the appraiser, the title closer, etc. That’s right, indirectly; you did hire a title closer.

The next several posts will explain and help you calculate your closing costs for several scenarios. Here’s how things will breakdown.

  • Closing costs for a residential sale.
  • Closing costs for a residential purchase.
  • Closing costs for the purchase of a newly constructed condo.

Stayed tuned, all will be explained soon. Thanks for reading, Jim.

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Categories: Buy It, Sell It
  1. Nicole
    April 9, 2008 at 2:51 pm

    Hi Jim- Did you get around to writing the three closing cost scenarios:

    * Closing costs for a residential sale.
    * Closing costs for a residential purchase.
    * Closing costs for the purchase of a newly constructed condo.

    They would be very helpful!!

    Thanks!

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