Who Pays What?

When you're buying or selling a home, there are always any number of ancillary expenses (or "closing costs"), which can be substantial.  If you are like a lot of people, you may be a bit fuzzy on who pays what.

So in this episode, we cover exactly that: We lay out what are the various expenses associated with a transaction, and who is responsible for paying which items.

Buyer Estimate Example PDF
Seller Estimate Example PDF

good afternoon hello peeps hello hello
hello
this is Diana Randall bro coming to you
here from Prescott Arizona
um we are excited to be here we got a
tip from a fellow uh Watcher slash
listener and I thought you know what
you’re right we should do a segment on
what is the seller’s cost and what are
the buyers costs who’s paying what who’s
paying what when it comes to closing and
escrows and all that who pays what and I
thought yeah brilliant idea yeah I mean
we take it for granted because we do it
all the time because we’re used to it
and of course different states uh do do
it differently than here in Arizona the
most important thing to remember when
you’re buying a home here in Arizona and
we get this a lot is that the seller the
the person listing their home they pay
both sides of the commission yeah so
they pay uh the listing agent side and
they pay the Buyer Agents most of the
time most most of the time the
government has been thinking about
changing that for a while future that
may be different but as of now in the
city of Prescott for the most part
sellers do pay the Realtors commission
correct which is not to say that it’s
free no the uh for the buyer for the
buyer yeah obviously the prices right in
the big checks the buyer’s right I mean
that would be reflected in the price
yeah the whole innocence the buyer is
paying for all that stuff so we’re not
allowed to say that real estate services
are free to the buyer because in effect
the buyers I mean obviously yeah but
your seller will have that reflected in
their price that being said it will not
be part of your settlement statement
yeah like sheets of paper and everything
here so that sheets yeah net sheets so
she’s got the seller’s net and I have
the home estimate for the buyer and we
thought we would compare so I’ll go over
quickly what a seller yeah what is
seller what are their fees yeah so uh
just just for uh to set the stage here
this is a uh imaginary transaction the
home is 500 000 which is a little less
than median here in Prescott these days
uh I have the buyer uh taking out a loan
and putting down twenty percent very
good so you know relatively standard so
of course if you are selling your home
you’re going to pay your own closing
costs you’re going to pay a portion of
that
um you’ll have your taxes will be
prorated yes and any HOA fees if you are
living in an HOA community that will
also be prorated yeah you do have to
bring money for that but in essence it’s
not really a closing expense because you
would have paid it anyway I mean these
things have to be paid uh but they will
do some prepayments for some of it
absolutely so if you are selling your
home you will pay uh title policy you
will pay escrow fee yeah so the title
policy is
22.57 and the buyer also pays uh part of
the
title policy it says here 1160. so some
of the expenses paid by uh by the seller
most of it’s paid by the seller and it
looks like about a third of it is paid
the title policy it’ll be a system of
checks and I mean it’ll be a system of
um credits and and debits and all that
stuff they’ll they’ll balance it all out
so each person will pay some of it some
of them will pay more than others uh
than the buyer yeah we also will have an
escrow fee yes so the escrow fee uh the
buyer and the seller both pay the same
amount and that’s on purpose so that the
you know the escrow company or the title
company and Escrow Company in Arizona do
both sides of the title and the escrow
so they split that so so everybody it’s
Even Stevens it’s between the buyer and
the seller septic inspection insectic
transfer fee if you buy a home with a
septic tank you uh the seller will have
to provide that fee and pay for for the
inspection yeah so the the transfer fees
50 bucks they are times when the buyer
might pay that but for the most part the
seller patients yeah and the seller will
have to arrange to have the tank
inspected in a timely fashion before you
close so but that’s only if you’re
buying a home with septic okay you also
will have an HOA transfer fee which I
talked about earlier if you’re in an HOA
development that really depends on the
HOA sometimes there are other fees the
seller has to pay with if there’s a
disclosure fee almost always a
disclosure fee seller has to pay that oh
most of the other fees are negotiable uh
but they tend to be paid more by the
buyer than the seller if you also buy a
property that has a well a seller will
have to pay the well transfer fee that’s
like thirty dollars yeah but these are
cost if you were a seller and you have
septic and you have an HOA and you have
a well those things are all absorbed by
this seller yeah okay now the buyer is
paying for if there is a well the buyer
pays for the wells well inspections uh
obviously there if you have a home
inspection the buyer pays for the home
inspection in other states that there
are pre-inspections uh those are
relatively unusual here most of the time
the buyer pays for their own inspection
and if there’s a well they pay for a
volume and quality test on the water
right and we always want to do that so
some other fees you have a recording fee
yeah I think we have one uh buyers have
the same recording fee 50 bucks a pop if
you decide to offer if you’re a seller
if you decide to offer a home warranty
that would be included in here yes if
home warranties go about 500 bucks yeah
it’s about five or six five to six
hundred recently very few people are
getting home warranties
sometimes the buyer will pay for their
own home warranty uh and over during the
the cobit thing it was hard to get
people to come out and do repairs so
home warranties really weren’t worth
very much but that seems to be changing
it’s changing again yeah also if you are
a seller and you agree to some repairs
and you say you know what I don’t want
to do it myself but I’ll give you money
in lieu of that money would be reflected
in this settlement sheets here so if you
decide hey I’m going to give you fifteen
hundred dollars to do the repairs you
found are needed during inspection I’m
just going to give you that cash and it
will go towards the buyer’s closing
costs
that’s something you should know a lot
of people think oh well I’ll get a check
for fifteen hundred dollars no it will
simply be credited to your closing cost
yeah but so be aware of that yeah
particularly if you’re
yes buyers walking away with cash
correct so that’s how it’s handled so
you’ll get a credit if you were the
buyer
um there’s also the like we talked about
this earlier your the commission for the
buyer as well as the listing agent
and those rates uh can vary yeah uh the
commission can go anywhere from I’ve
seen one and a half all the way up to
three percent it just depends and it is
negotiable it is negotiable yeah and we
we are not allowed to talk very freely
about commission rates that’s right part
of the the government once people have
more conversations about commission
rates but we’re really not allowed to
talk about it much that’s right they’re
kind of across purpose but there it is
but there it is that is what you’re
saying you so your seller is looking at
closing costs title policy escrow fee uh
an inspection
transfer for septic HOA transfer fee
well transfer recording fee home
warranty if you do that repairs if you
do that and commission yeah so that’s a
lot to kind of remember but that’s
pretty much what the seller yeah and
I’ll put these two I’ll put these sheets
on the website as well so you can
download them and look at them that’s
right but in a nutshell so on the net
sheet the net at close is uh wait hold
on the total I’m looking for the total
all right so the total closing cost is
thirty six thousand dollars of that uh
in this example 30 of that is the real
estate fee so the vast majority of the
seller closing costs are the marketing
costs the real estate fees correct uh
the rest of it comes in at about six
right beyond that it’s not very much and
that’s just based on a house 460 000
somewhere up in that range 500 minus the
twenty oh
letters all right so on the buyer’s side
um this the the title fees escrow fees
mobile closing they have your
endorsements you don’t see many of those
that’s endorsement is
um something you add on to a title
policy to cover additional things we
don’t see those that often uh closing
protection letter we don’t see a lot of
that either
um all of those fees together come to
about two grand uh the buyer closing
fees are mostly generated by a loan if
you’re not doing a loan obviously you
won’t have lender fees but the lender
fees come to like origination fees like
four thousand uh appraisals 500 that’s
more like 800
um it’s example they said five Brands
usually more like 800 right yeah
it just depends on it just depends uh so
so most of the most of the closing costs
that the buyer will pay are associated
with with the loan so once again we will
uh we’ll make these available so you can
see the exact breakdown yeah and it’s
something to kind of educate yourself
about so you know because some people
come in they’re like oh will I be paying
the seller their commission yeah no
that’s not on you you know um what is uh
do I have to pay who who pays for the
HOAs that have already been paid so it’s
important to understand there’s a lot of
checks and balances
um debits and credits everything and
you’ll get a full settlement sheet which
is clearly identical everything and we
do we do net sheets or or in the closing
cost sheets for our clients in advance
to give you estimates if that’s
something that you’re concerned right if
you’re unless what will I owe sure we’ll
figure it out for you and we’ll give you
an approximation of what you can look at
for your closing so it’s a lot to think
about it’s a lot of different parts and
and things to yeah it’s kind of
overwhelming but it’s okay I mean we
typically use a great we have a very
good relationship with a title company
here and they do an amazing job doing
the prorations and explaining and
understanding so we will help you every
step of the way so you’ll understand
what exactly each of these costs are
absolutely so don’t fret my friends
don’t fret come on in and buy your house
and be excited about living here
put this on the Wayside I mean it’s too
much to worry about you’ll have a good
time though when you get here all right
so we hope to hear from you soon please
check us out at
pickle411.com that is your information
site whether you’re a buyer seller
somewhere in between there’s something
there for you that will Amaze Astound
inform did I say that already I think so
I’m entertain whatever whatever it will
float your boat it will so you have a
boat it’ll start floating that’s right
after you go to pick before that’s right
call us and we’ll help you every step of
the way it’s all free okay have a good
day thank you bye