Who pays for what in a Texas real estate transaction?

By
Real Estate Agent with E*Rae Realty 651873

My Austin clients frequently have questions about who pays for what in a real estate transaction.  In Texas, almost everything is negotiable; however, there are certainly norms and the promulgated forms used by Texas REALTORS naturally lend way to certain cost distributions.
 
In order to think about who pays for what is a real estate transaction, you first most consider what expenses are involved in a real estate transaction.  One of the largest expenses in a real estate transaction is commissions.  In Texas, real estate commissions are customarily a seller expense.  It is most common to see the seller pay six percent of the sales price towards commissions, three percent to the buyer’s broker and three percent to the listing broker.  However, this distribution is not set in stone.  For multi-million dollar listings, the commission may be lower, and the seller ultimately determines the commission percentage as well as the distribution between the buyer and the listing brokers. 
 
Additional costs involved in a real estate transaction include marketing expenses, title policies, appraisals, surveys, inspections, energy audits, and loan origination fees.  Good listing agents will usually take on the marketing expenses incurred to properly advertise a property.  These expenses include professional photography, print marketing (including mailers), digital marketing platform expenses, and advertising fees.  Staging fees may be paid for by the seller directly or the listing agent.
 
The owner’s title policy usually costs a little more than one half of a percent of the sales price.  Click here for exact title policy costs in Texas.   The owner's title policy is typically a seller’s expense.  However, with the competitive buying market it is not uncommon to see buyer’s incurring this cost to make their offers more appealing to the seller.  The lender’s title policy cost is related to the loan amount for the property and is typically a buyer expense.
 
Property inspections are a prudent decision for any buyer.  These inspections can cost several hundred dollars, and additional specific inspections for items such as wells, septic systems, foundations, etc. may be needed as well. These inspections usually occur during the option period at the expense of the buyer.  In certain situations, it may be beneficial to have a property pre-inspected.  In this case, the inspection would be a seller fee.
 
Lender related fees are typically paid for the buyer.  In addition to the lender’s title policy, buyer costs associated with loans include loan origination fees and appraisal fees.  These fees will vary based on both the property and the lender utilized.
 
A survey is generally required for the sale of property in Texas.  If the seller has an existing survey for the property, it may be used for the sale if it’s approved by the lender and the title company.  The Texas Real Estate Commission’s 1-4 Family Residential Contract offers 3 options for how the survey will be obtained.  Option 1: an existing survey will be used and it if is not approved by lender/title company you can elect for the seller or the buyer to pay for a new one. Option 2:  seller pays for a new survey.  Option 3:  buyer pays for new survey. 

 

survey costs texas real estate
 
A condo does not require a survey for a real estate deal.  However, there will be other fees associated with a condo sale.  When you are involved with the sale of a TX condo, you will want to consider who is going to pay for the resale certificate and who pays for the transfer fees.  Again, the Texas condo contract is written in such a way that lends way for the buyer to pay for at least a portion of the transfer fees.  Thus it is common for the seller to pay for the resale certificate and the buyer to pay for the transfer fees but this in no way set in stone.  Both fees are entirely negotiable.
 
If a home warranty purchase is noted on a real estate contract, it is likely an expense to the seller.  This part of the real estate contract states that the seller will reimburse the buyer X amount towards the cost of a residential service contract.  Escrow fees, the fees paid to the Title Company, are typically split between the buyer and seller.  You may also see legal fees, processing fees, and various fees imposed by municipalities on either side of the closing document. 

 

home warranty expense texas

 
This list is by no means exhaustive.  There are a variety of fees involved with a real estate transaction and who pays for what is usually negotiable.  If you’re a buyer in a competitive market, the more “typical seller-related expenses” you agree to take on, the stronger your offer will appear to sellers.  If this all appears to be a bit much to take in and you’d like someone to walk you through the details or if you have additional questions, contact me today.

 

austin houses for sale
 

This post originally appeared on shesellsaustin.com.

Posted by
Erika Rae Albert 
Broker, Realtor®, GRI
 
 
108 Wild Basin Road South Suite 250
Austin, TX 78746
t: 512-779-7597
e: erika@shesellsaustin.com
 
www.shesellsaustin.com Facebook icon   LinkedIn icon   Twitter icon   Instagram icon
 

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Rainmaker
1,120,206
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
& Host of Postcards From Success Podcast

It's funny how much this varies from region to region. Good post for your clients!

Jul 01, 2017 08:14 PM #1
Ambassador
4,391,623
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Erika

It's interesting how things vary from state to state, and then even from transaction to transaction. It's an important topic for both parties to understand up front so there are no surprises!

Jeff

Jul 01, 2017 10:30 PM #2
Anonymous
B Kent

Hi Erika
Would you be able to give me a hypothetic cost for a sale of a home in Temple? The sale amount would be for $177,000.

Your input would be greatly appreciated. Thank you !

May 07, 2019 07:34 PM #3
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