A housing report published in October showed the average amount of closing costs paid by a “typical” home buyer in 33 of the largest metropolitan areas in the United States. Nationally, home buyer closing costs averaged $6,246 in July of 2018. Among the metros included in this report, costs were lowest in Cincinnati, Ohio ($4,259) and highest in the New York City area ($11,232).
Average Closing Costs Among Home Buyers: 2018
This report was created by the real estate information company Zillow and the San Francisco-based company Thumbtack. Though it was published in October, it used home-price data from July of 2018. Those home values are likely higher now than they were back in the summer. So the average closing costs might be a bit higher as well.
Still, this analysis gives us some insight into what a typical home buyer pays to close on a home. It also provides a good comparison between buying costs in different parts of the country.
The following table was adapted from the Zillow / Thumbtack report:
|Metropolitan Area||Median Home Value (July 2018)||Closing Costs|
|Dallas-Fort Worth, TX||$231,100||$6,352|
|Kansas City, MO||$182,600||$5,012|
|Las Vegas, NV||$266,200||$5,559|
|Los Angeles-Long Beach-Anaheim, CA||$643,300||$7,674|
|Miami-Fort Lauderdale, FL||$275,700||$7,398|
|Minneapolis-St Paul, MN||$261,300||$5,271|
|New York, NY||$429,700||$11,232|
|San Antonio, TX||$185,900||$6,352|
|San Diego, CA||$584,100||$7,674|
|San Francisco, CA||$954,100||$7,674|
|San Jose, CA||$1,292,600||$7,674|
|St. Louis, MO||$161,800||$5,705|
Charges and Fees for a Real Estate Transaction
Closing costs are the various fees and charges that can accumulate during a typical real estate transaction. Both the buyer and seller can incur them. The buyer’s closing costs are usually higher, especially when a mortgage loan is being used to complete the purchase.
They can be paid separately by the individual parties, or the seller can agree to cover some of the buyer’s costs. It varies. These kinds of details are typically ironed out during initial negotiations and written into the purchase agreement. Who pays what will largely depend on the current state of the local real estate market, and which party has more negotiating leverage.
Closing costs can vary widely from region to region, partly due to differences in housing costs, taxes, etc. You can see this clearly in the table above.
They can also vary from one home buyer to the next within the same region. For instance, some borrowers choose to pay points at closing in exchange for a lower mortgage rate. Others choose to forego this extra upfront cost, taking a higher interest rate instead. This is just one example of a variable that can affect the buyer’s finalized closing costs.
According to the Zillow report mentioned earlier:
“Closing costs add thousands more to the total amount buyers should be prepared to pay. These costs frequently include the origination fee, appraisal, transfer taxes, the first year of homeowners insurance, title insurance, and more. These add about $6,250 to buyers’ expenses on the home purchase for the median home.”
On average, closing costs for buyers in the U.S. range from 2.5% to 5% of the purchase price. Borrowers with limited funds in the bank could potentially reduce their upfront costs by comparison shopping among lenders, skipping the discount points, and asking the seller to make a concession.