1. Typical Allocation of Closing Costs

Closing costs encompass a range of fees and expenses necessary to finalize a property transaction. While the exact division can differ, a general breakdown includes 

• Buyer’s Responsibilities:
  
  • Loan-related fees (e.g., origination fees)
    
  • Appraisal and inspection fees
    
  • Title search and lender’s title insurance
    
  • Recording fees and transfer taxes 
• Seller’s Responsibilities:
  
  • Real estate agent commissions
    
  • Owner’s title insurance (in some regions)
    
  • Outstanding property taxes and liens
    
  • Repairs or credits agreed upon during negotiation 

It’s important to note that these allocations are not fixed and can be adjusted based on mutual agreement.​

2. Understanding Title Insurance

Title insurance protects against potential legal issues related to property ownership. There are two primary types 

• Lender’s Title Insurance: Typically required by mortgage lenders, this policy protects the lender’s interest in the property. The buyer usually pays for this insurance.​
  
• Owner’s Title Insurance: This optional policy safeguards the buyer’s ownership rights. Depending on local practices, either the buyer or seller may pay for this insurance.​
  

In some areas, it’s customary for the seller to cover the cost of the owner’s title insurance to assure the buyer of clear ownership. However, this is negotiable and should be discussed during the contract phase.​

 3. Negotiating Closing Costs

The division of closing costs, including title insurance premiums, is often subject to negotiation. Factors influencing these discussions include 

• Market Conditions: In a buyer’s market, sellers may be more inclined to cover additional costs to facilitate the sale.​
  
• Property Condition: If a property requires significant repairs, a buyer might negotiate for the seller to absorb more closing costs.
  
• Local Customs: Regional practices can dictate typical cost allocations, but these are not binding and can be adjusted.​
  

Engaging a knowledgeable real estate agent or attorney can provide guidance on customary practices in your area and assist in negotiating favorable terms.