You spend your time working hard to budget for a land purchase of your dreams. Perhaps it’s a plot in the Rocky Mountains of Colorado, a luxury farm or ranch in Montana, hunting land in Wyoming, or a waterfront retreat to camp with the grandkids you’ve been saving up for. There are some costs to consider while budgeting, such as closing costs. Closing costs are various fees paid to complete a purchase in real estate. Closing costs are paid in addition to the purchase price, and buyers sometimes forget to account for them.
The amount of closing costs ultimately depends on how you choose to finance your land purchase. For example, are you paying in cash or financing the purchase with a third-party lender? A cash deal minimizes fees, but escrow fees are still paid to the title company for preparing the title, recording fees, agent commissions, attorney fees, etc. If you purchase a loan from a lender, there will be lender fees, appraisal fees, and other third-party fees if you need the land surveyed or inspected.
Who Pays Closing Costs?
In most sales, the closing cost fees are split between the buyer and seller. However, deals are unique, and things can be negotiated for the seller to pay all the closing costs or the buyer to cover them. The seller may be willing to cover the closing costs, for example, if it is a cash deal because it means a shorter closing period with less chance of the deal falling through.
You can discuss closing costs with your REALTOR®. They can give you an approximation of what the fees might look like. Once you have that information, you are better equipped to make an offer where you and your agent can work towards the best price and deal.