Image courtesy of Arvind Balaraman /

There is a bit of a misunderstanding among people about whether the buyer or the seller is respoinsible for certain closing costs.  Most (but not all) of the closing costs are officially the buyer’s responsibility in Georgia.  However, a large percentage of transactions close with the seller paying most or all of these costs.  This is because many buyers are cash strapped at the time of purchase; having to save as much cash as they can to cover their down payment, moving costs, and post-closing furniture purchases.  Therefore, it is very common for a buyer to make an offer on a home at a certain price but to include that as part of the deal, the seller must pay a certain amount towards the buyer’s closing costs.  So, even though the seller is technically paying these costs, it is important to understand that essentially what has happened is that the buyer has paid more for the home to have the sale cover their closing costs.  The seller negotiates based on their net; so a seller willing to sell a home for $500,000 and pay $10,000 towards the buyer’s closing costs as part of the deal would certainly have also agreed to sell for $490,000 if the buyer picked up the tab for their own closing costs.  Therefore, in that case, the buyer effectively paid $10,000 more for the home in order to get $10,000 of their closing costs covered.  In a sense, this is an indirect way of financing the closing costs instead of paying them in cash at closing.  The additional $10,000 loan amount will have a minimal impact on their moonthly payment and many buyers would rather have that additional cash flow in exchange for a slightly higher monthly payment.  It is also important to note that most loan products have limitations on the amount of seller paid costs are allowed and that is typically limited to 3% of the purchase price though it can vary.  Also, the home must appraise for the full purchase price; so bumping up the price to add a great deal of seller paid closing costs can increase the likelihood of having appraisal issues.

In part 2 of this post, I will outline what those costs are.  You can read that post by clicking this link:
Georgia Closing Cost Break Down

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