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Things to Know Before You Buy a Home: Part 9 – Closing Costs Explained: Who Pays What in 2026
Closing costs are one of the most confusing parts of buying a home in the Minneapolis Saint Paul metro area—especially in the south metro (Lakeville, Apple Valley, Eagan, Burnsville, Bloomington, and surrounding communities). They can add 2–5% to the purchase price and are negotiable. Understanding them upfront helps you budget accurately, negotiate smarter, and avoid surprises at closing.
What Are Closing Costs?
Closing costs are fees paid at the end of the home-buying process to finalize the loan and transfer ownership. They include:
- Lender fees (origination, appraisal, credit report)
- Title insurance and title company fees
- Escrow/prepaid taxes and insurance
- Recording fees
- Home inspection (optional but recommended)
- Attorney fees (if used)
- Survey (if required)
Total: Typically 2–5% of the home price (e.g., $6,000–$15,000 on a $300,000 home).
Who Traditionally Pays What?
- Buyers usually pay:
- Loan-related fees (origination, appraisal, credit report)
- Title insurance (lender’s policy)
- Prepaid items (taxes, insurance)
- Home inspection (optional)
- Sellers traditionally pay:
- Transfer taxes (in MN, sellers often pay this)
- Real estate agent commissions
- Title insurance (owner’s policy in many cases)
- Prorated property taxes
But everything is negotiable — especially in today’s market.
Strategic Ways to Handle Closing Costs in 2026
- Seller-Paid Closing Costs
Ask the seller to cover some or all of your costs (e.g., 3% of sale price).- Upside: You bring less cash to closing (costs roll into the loan).
- Downside: In a hot market or multiple-offer situation, sellers prefer buyers who pay their own costs (it keeps the net higher for them).
- Roll Closing Costs into the Purchase Price
Example: Home priced at $300,000. You need $9,000 in closing costs.- Seller agrees to pay your costs but raises the price to $309,000.
- You finance the extra $9,000 (adds ~$12/month to your payment at current rates).
- Seller still nets $300,000 after costs.
- Win-win in competitive markets.
- Market Conditions Matter
- Slow market: Sellers are more willing to cover closing costs to close the deal.
- Hot market: Buyers who pay their own costs look stronger (less risk for seller).
The Bottom Line
Closing costs are negotiable and can be structured to your advantage. Don’t assume the seller will pay them—or that you must pay them all. The right strategy (seller concessions, price roll-in, or full buyer responsibility) depends on the market and your offer strength. If you’re ready to buy a home in Lakeville, Apple Valley, Eagan, Burnsville, Bloomington, or the south metro, let’s talk. As a real estate agent in Lakeville MN with over 20 years of experience helping buyers navigate Minnesota home buying costs, I’ll make sure you understand every fee, negotiate smartly, and close with confidence.
Ready to buy smart and save on closing costs in 2026? Text or call me today, Tom Sommers with Coldwell Banker Realty, for a free, no-obligation consultation. Let’s get you the best deal possible.
