Who Pays the Closing Costs On FSBO?

Whether you are selling or buying a home, you have the option to use an agent to help you through this intricate process. In the case of an FSBO, where a homeowner chooses to forgo the use of an agent and sell their home For Sale by the Owner, this can leave everyone wondering who pays the closing costs?

Much in the same way as when an owner sells their house on the market with a seller’s agent, the same process must be followed. While there are some minor differences, you can expect to find the same steps that need to be taken. 

After the Contract Has Been Signed

You can breathe a sigh of relief because both parties have signed the purchase contract; all you have to do now is ensure that all the loose ends are tied up. Without the use of a seller’s agent, however, you are likely using an escrow company to hold onto any funds. 

Suppose there are any contingencies open, such as home inspection, an appraisal of the home that the bank requires. All of these contingencies need to be completed first. Once all the contingencies are met, the buyer will let all parties involved know, such as the seller and the title company, and now they can move forward with the closing costs. 

Hiring a Lawyer

That said, how the closing costs will be handled is agreed upon when the escrow is first opened. This can vary from state to state, and therefore, is dependent on the local customs. And regardless of whether or not you are the buyer or seller, you will want an attorney to help you, and you will each pay for your own.

Many details can come up after you have signed the purchase contract, from questions of the title to any liens attached to the house. A lien occurs when the possession of a property is tied up with a debt owed, for example, a default on a mortgage. Because this can become tricky, a lawyer can be a great help to sort through it all.   

The Closing Costs

The closing cost fees can include various expenses, from home protection plans, transfer taxes, title policy fees, and a few other not so widely known hidden costs. On average, these fees typically amount to two to four percent of the purchase price. 

In some states, it is the buyer who covers the cost of closing fees, while in others, the seller and the buyer share the costs. But it can be in the incentive of the seller to cover these fees. Otherwise, a buyer may lose interest in purchasing their home.

In some cases, the lender will help to cover the closing costs. But regardless of whether it is the lender or the seller who does this, it will be negotiated early on, which the buyer will have to worry about after the purchase contract has been signed. 

Who Pays the Closing Costs On FSBO? > Conclusion

There are a few different ways. The home buyer can take care of the closing costs of an FSBO home. Whether through the buyer, the lender, or split between the buyer and the seller. You will want to take care of this necessary part of buying a home while in negotiations. 

Wanting to ensure that the home you have just signed an agreement to purchase is taken care of properly, such as covering all closing costs, can be complex and requires a bit of know-how. To ensure that all the closing costs are correctly taken care of, it is always best to have a knowledgeable agent by your side.