In a typical cash real estate transaction, closing costs for cash buyers are often lower than those for buyers using a mortgage, but who pays what in a real estate transaction depends on the agreement between both parties. In most cash sales, the buyer covers minimal closing fees, while sellers may still be responsible for items like title transfer, property taxes, or agent commissions, unless negotiated otherwise.
However, when you work with a direct cash buyer like Trusted House Buyer, we take care of all closing costs, so you don’t pay a thing out of pocket. Selling your home to a cash buyer streamlines the process and eliminates many traditional fees; who pays what in a real estate transaction? Unlike sales involving financing, there are no lender charges, mortgage fees, or appraisal requirements.
In competitive markets like San Diego, cash sales are becoming more common because they’re faster, involve fewer complications, and can save sellers thousands in fees. Keep reading to learn exactly how closing costs break down and what you can expect in a cash sale scenario! Who pays what in a real estate transaction has got you.
What Are Closing Costs?
Before we delve into what fees are associated, it’s important to understand what closing costs are. In a nutshell, closing costs are the fees incurred throughout the process of closing on a home.
This can be lender-related fees when a buyer takes out a mortgage, taxes, appraisal fees, and more. They must be paid when you transfer the title deed over to the new home-owner. In San Diego, closing costs generally range between 2% and 5% of the total home purchase price.
If a buyer is taking out a loan to purchase your home, closing costs are usually split between the two parties. Traditionally, the buyer tends to pay the bulk of the amount since most of the fees are mortgage-related and are helping them finance the purchase of your home. Finding a buyer that can pay cash in full, without the need of outside financing, helps both ends of the transaction, as there are no additional fees, and allows a much faster closing process.
What Are the Closing Costs Paid by the Seller?
In the case of a cash sale with us, there are no hidden, last-minute fees like other ‘sell my house fast’ companies; we handle all closing costs associated with the sale–period.
If you’re working with real estate agents, you as the seller would need to pay the real estate commissions for both you and the buyer’s agents. This is typically around 6% of the total purchase price, with 3% going to your agent and 3% to the buyer’s agent.
In addition to that, you would normally need to pay transfer tax or title fees. Other closing costs could include title insurance, HOA fees, and attorney’s fees. Not all states require an attorney to conclude the sale, and it’s not required in California. The seller is responsible for the bill when working with other companies or buyers.
What Are the Closing Costs Paid by the Buyer?
In the case of a non-cash sale, buyers have to pay several fees that could include: mortgage costs, property tax, and appraisal and home inspection fees. Buyers need to pay mortgage insurance fees if they have less than 20% of the down payment, along with a credit monitoring fee. In addition, there are other miscellaneous costs like mail and courier fees that are a normal part of the transaction.
However, it’s a whole different ball game with a cash sale, as a cash sale can nullify these costs. If there isn’t any mortgage, insurance, or property tax, the buyer is off the hook and pays for almost no closing costs. This is why it’s important to understand all of the fees associated with a cash sale, and who is usually responsible for them.
Moving Forward
The process of selling a home for cash is almost always quicker and requires less work as a seller than a non-cash sale transaction. Not only is the paperwork much simpler, but we cover all closing costs associated with buying your home. Regardless of what industry standards are for cash sales, we work with homeowners to make the process as easy as possible for you and give you the best cash offer.
A large portion of traditional closing costs can come from working with real estate agents and their associated commissions. If a buyer has to finance the purchase of your home, that also adds on fees, delays, and other complications to a sale. Regardless of who typically pays for fees, we guarantee to our sellers a fast and efficient closing on your home–all cash, with all fees covered by us, with no real estate agent commissions to worry about! Interested in how soon you can sell a house after buying it or San Diego home auctions – we’ve got you covered.