Homebuyers continue to be saddled with high mortgage rates, which have been hovering close to 7%. However, mortgage applications have ticked up 12.5% for the week ending June 6 after three straight weeks of declines. And when the time comes to close the deal, homebuyers need to be prepared to bring money to the table—and they’ll pay more in closing costs in some states.
“Both buyers and sellers incur closing costs in a real estate transaction,” says Jiayi Xu, economist at Realtor.com®. “For sellers, potential costs may include transfer taxes, title insurance, escrow fees, and other related expenses. Buyers, on the other hand, may be responsible for costs such as appraisal and inspection fees, title and escrow fees, attorney fees, lender charges, and more.”
States without transfer taxes or minimal transfer taxes are found to have lower total closing costs, but the states with the highest closing costs as a percentage of sales price tend to be locations where the transfer taxes make up the bulk of the pricing. Real estate transfer taxes are part of closing costs and are due at the closing. Transfer taxes are imposed on the “transfer” of the property deed from the seller to the buyer. It’s a one-time fee, and the amount you’ll pay in a transfer tax will vary depending on where you live—usually the seller is responsible for paying the transfer tax.
The actual closing fees were taken from a sample of 450,000 purchase quotes from Jan. 1 through Dec. 31, 2024. Home prices over $10 million were not considered for the study.
LodeStar calculated the percentage of the sales price as the average total closing costs with recording fees and taxes included, divided by the average sales price in a given geographical area.
