Who pays closing costs in Massachusetts?

The Bay State boasts a bustling real estate market, but with a median sale price of $600,000 for a single-family home, it’s clear that buying or selling property here comes with its own set of considerations. In this guide, we’ll break down the ins and outs of closing costs in Massachusetts, offering valuable insights for both buyers and sellers.

Closing Costs in Massachusetts:

Closing costs are a crucial aspect of any real estate transaction, and in Massachusetts, they average around 1.3 percent of the home’s purchase price, excluding real estate commissions. This percentage is notably lower than neighboring states like Connecticut (2.1 percent), New Hampshire (2.3 percent), and New York (3.1 percent).

For example, on a median-priced $600,000 home in Massachusetts, closing costs would typically amount to $7,800. However, it’s essential to note that prices can vary significantly across different markets within the state.

Who Pays for What?

1. Closing Costs for Buyers:

   The bulk of closing costs for buyers revolve around securing a mortgage. These can include:

   • Application fees
   • Credit checks
   • Loan origination fees
   • Document preparation and processing fees
   • Home appraisal costs
   • Mortgage points (if chosen)
   • Title insurance and title search costs
   • Escrow fees for prepaid homeowners insurance and property tax funds

   Additionally, it’s advisable for buyers to invest in a professional home inspection, which typically costs a few hundred dollars.

2. Closing Costs for Sellers:

   Sellers have their own set of expenses, with the most significant being commissions paid to real estate agents. This typically amounts to 5-6 percent of the sale price, which is divided between the seller’s agent and the buyer’s agent. On a median-priced $600,000 sale, this could be as high as $36,000.

   Other costs for sellers may include:

   • Transfer taxes (approx. $2.28 per every $500 of property value)
   • Property taxes and HOA fees accrued up to the closing date
   • Existing mortgage payoff fee, if applicable
   • Concessions, if offered to the buyer (e.g., covering repair costs from a home inspection)

Lowering Closing Costs:

Both buyers and sellers in Massachusetts have opportunities to negotiate and potentially lower their closing costs:

For Buyers:

• Compare mortgage lenders to find the best rates and fees.
• Negotiate with the seller for concessions, especially if issues are found during the home inspection.
• Explore first-time buyer assistance programs for potential financial assistance.

For Sellers:

• Negotiate the realtor commission to potentially save thousands on high-priced properties.

Conclusion:

Navigating the Massachusetts real estate market comes with its unique considerations, particularly when it comes to closing costs. By understanding the breakdown of these costs and exploring negotiation opportunities, buyers and sellers can make informed decisions that align with their financial goals. Whether you’re looking to buy or sell, partnering with a knowledgeable local agent can be a valuable asset in this competitive market.