June 22, 2024

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Closing Costs In Virginia: Who Pays For What?

5 min read

Before you sell your Virginia home or get the keys to a new house in this history-filled state, you’ll need to understand your share of closing costs. These fees and expenses associated with buying or selling a home can stretch well into the thousands or beyond. In a state where the median price of a home exceeds the national median, they can add up to a very significant chunk of change.

The bulk of closing costs are related to the mortgage loan, which means buyers typically foot most of the bill. But sellers aren’t off the hook. Read on to learn how much closing costs run in Virginia, and who pays for what.

How much are closing costs in Virginia?

Closing costs can vary widely by state. According to the most recent ClosingCorp data, costs in Virginia average 1.7 percent of the home’s sale price (not including Realtor fees). That’s right on par with West Virginia’s 1.8 percent, and much lower than neighboring Maryland’s high rate of 3.7 percent.

The amount of closing costs incurred will also vary greatly based on how expensive the house is. Redfin’s July 2023 data shows the median sale price of a Virginia home as $432,300. That’s higher than the national median price of $406,700, and it means that closing costs may be high despite the relatively low rate. For a median-priced $432,300 Virginia home, 1.7 percent means closing costs would come to $7,349.

Of course, in a more expensive area of the state like Arlington, where the median is $739,900, that figure would be higher: $12,578. And in Lynchburg, which has a median of just $259,900, it would come to $4,418.

Who pays closing costs in Virginia, buyers or sellers?

Both buyers and sellers pay some form of closing costs on a home sale in Virginia, as is the case in any state. Both parties will also be on the hook for legal fees if you decide to hire a real estate attorney.

Closing costs for buyers

As a buyer, most of your closing costs will relate to taking out a home loan. (Which means your costs will be much lower if you’re able to make an all-cash offer.) Buyers typically cover fees related to both the mortgage and the property itself, including:

  • Loan application and origination: Many lenders charge fees associated with both applying for and originating the home loan.
  • Credit report: They might also charge a small fee to check your credit.
  • Escrow: Your lender might ask you to deposit a set amount of prepaid property taxes and/or home insurance premiums into an escrow account. You may have to pay a maintenance fee on the account as well.
  • Title insurance and search: Who pays for title-related fees can vary from state to state, and in Virginia, it’s typically the buyer. A title search ensures that there are no issues that will hinder the transfer of ownership, and title insurance protects against problems with the title, like liens or encumbrances.
  • Mortgage points: You might be able to buy mortgage points upfront to get a lower interest rate, which can save money in the long run. You’ll typically pay 1 percent of the loan amount for each point, which will lower the rate by 0.25 percent.
  • Appraisal: Your lender will require a professional home appraisal to establish that the home is worth at least the amount it’s lending you. The fee varies but typically runs a few hundred dollars.
  • Home inspection: While home inspections aren’t required, it’s smart to get one anyway to identify major problems, or small ones that could progress over time. You might even be able to use the results to negotiate the cost of repairs.
  • Transfer tax: Virginia’s transfer tax, which covers the transfer of property ownership, is complicated. Buyers typically pay recordation fees, also known as “mortgage stamps,” along with other taxes, and sellers pay their own transfer fee as well. Your lender or agent will be able to help you figure out exactly how much you owe.

Closing costs for sellers

Sellers have to hand over a chunk of cash at closing, too. In fact, the seller’s closing cost tab tends to run even higher than the buyer’s, because sellers are responsible for real estate commissions, which run between 5 and 6 percent of the home’s sale price. On a median-priced $432,300 Virginia home, 6 percent is a daunting $25,938. Other seller’s closing costs can include:

  • Title: The buyer typically pays title-related fees in Virginia, but the seller may be responsible for some as well.
  • Transfer tax: Virginia’s transfer tax, which covers the transfer of property ownership, is complicated. Buyers typically pay recordation fees, also known as “mortgage stamps,” along with other taxes, and sellers pay their own transfer fee as well. Your lender or agent will be able to help you figure out exactly how much you owe.
  • Outstanding property taxes and HOA fees: If you owe any property taxes or HOA fees on the closing date, you’ll need to pay up. (For example, if the payments are usually due on the first of the month and you close on the 20th, you’ll owe 20 days worth.)
  • Concessions: Sometimes, sellers will agree to pay a portion of the buyer’s closing costs in order to hasten the deal. Sellers don’t have to say yes if asked, but it’s very common.
  • Home warranty: Sellers also sometimes offer to cover the cost of a home warranty, which protects major systems and appliances.
  • Wire transfers: Your bank will probably charge a small wire transfer fee if you’re transferring funds to pay the balance on your mortgage.

Lowering your closing costs in Virginia

If you’re feeling daunted by all these extra expenses, keep in mind that many closing costs are negotiable. Sellers can typically negotiate their largest expense, the Realtor commission, regardless of market conditions. And buyers could save thousands if they qualify for any number of down payment and closing cost assistance programs. Virginia offers many financial-assistance programs for first-time homebuyers in particular, designed to help buyers bear the upfront costs. It also doesn’t hurt to ask your lender if it’s possible to get a discount or have a fee waived.

Find a local real estate agent

No matter if you’re buying or selling in Virginia, hiring a skilled local real estate agent can be the key to a smooth transaction. Ask friends and family for recommendations, especially if they’ve bought or sold recently in your desired market — an agent who knows Washington, D.C. suburbs like Alexandria and Arlington well might not know Virginia beach towns at all, and vice versa. Check websites and online reviews as well, and interview several candidates before selecting an agent.

FAQs

  • Realtor commissions are typically the most expensive part of closing costs. In Virginia, where the median home price is a high $432,300, a 6 percent commission comes to $25,938 — a daunting amount.

  • According to ClosingCorp, average closing costs in Virginia average about 1.7 percent of the home’s sale price, not including agent commissions. On a median-priced $432,300 Virginia home, that comes to $7,349. Your bill will vary depending on home prices in your desired market — and remember, the costs are shared between the buyer and the seller, so you’re not on the hook for the entire amount.

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