Closing costs in Delaware: Who pays for what

The closing is the final part of any real estate transaction. It’s also when the buyer and seller are required to pay all of the fees and expenses associated with a home sale, which are collectively known as closing costs. These costs typically amount to somewhere between 2 and 5 percent of the total loan amount (not including Realtor commissions) and can include things like loan origination fees, appraisal costs, title insurance and more.

Is a home purchase or sale in the First State on your radar? Here’s what to know about closing costs in Delaware.

How much are closing costs in Delaware?

The exact amount of a transaction’s closing costs varies from state to state, and also based on the home’s sale price. Closing costs in Delaware are particularly high: Data from CoreLogic shows that the state’s closing costs average 5.4 percent of a home’s sale price (excluding agent commissions). That’s the highest rate in the nation; Washington D.C.’s closing costs come in a distant second at 3.9 percent.

The median sale price for a home in Delaware in June 2024 was $355,100, according to Redfin data — 5.4 percent of that comes to more than $19,000. Of course, prices are higher in some areas of the state than others. In the capital of Dover, for example, the median home price was just $300,000, which would equate to lower closing costs of $16,200. But in Greenville, the median was a steep $985,000 — that pushes the closing cost bill way up past $53,000.

Who pays closing costs in Delaware, buyers or sellers?

The full amount of closing costs is not paid by any one party. No matter which state you’re in, at least some of a transaction’s closing costs are paid by both buyer and seller. While the exact breakdown of who pays what is often negotiable, most closing expenses tend to come out of the buyer’s pocket — that’s because so many of them are related to securing a mortgage. Here’s a look at who pays which closing costs in Delaware.

Common closing costs for buyers

• Loan-related fees: Mortgage lenders often charge fees to originate and process loans. There will also likely be a charge to run a credit check, and if you wish to lower your rate by purchasing mortgage points, that will cost a fee as well (typically 1 percent of the loan amount for every 0.25 percent).
• Title-related fees: A title search will be run to ensure there are no ownership issues with the home, and the buyer may be responsible for purchasing a title insurance policy as well (who pays for this is often negotiated, so it might be the seller’s responsibility instead).
• Appraisal fee: A home appraisal will be required by lenders in order to confirm that the home is worth at least the amount that they are lending. This usually runs a few hundred dollars.
• Home inspection fee: Though inspections are not a requirement, it is a good idea to get one — the review, performed by an independent professional, will uncover any issues with the home before you close. The cost of a home inspection will likely be another few hundred dollars, give or take depending on the size and condition of the house.
• Escrow fee: Many home transactions require certain funds to be held in an escrow account until closing. This typically incurs a modest maintenance fee.
• Legal fees: Delaware state law requires that an attorney oversee real estate transactions. Legal fees will be due at closing.

Common closing costs for sellers

• Real estate commissions: If the seller chooses to hire a real estate agent, the agent’s commission will come out of the sale proceeds. This fee typically runs somewhere between 2.5 and 3 percent of the home’s sale price, and is often negotiable. Sellers may or may not also be responsible for the buyer’s agent’s fee.
• Transfer taxes: Real estate transfer taxes are uncommonly high in Delaware, amounting to about 4 percent of the home’s purchase price. This tax is typically the responsibility of the home seller, but here the amount is often split between buyer and seller.
• Recording fee: In Delaware, there will also be a modest fee for officially recording the sale of the home with the local government.
• Outstanding property taxes and HOA fees: Property taxes and HOA dues (if applicable) must be paid by the seller right up until the property changes hands on closing day.
• Mortgage-payoff fees: If the home still has a mortgage on it, you’ll pay that off in full at closing. There will likely be fees associated with this as well.
• Seller concessions: If you’ve agreed to any concessions in order to close the deal, such as paying for repairs or covering some of the buyer’s closing expenses (this is not unusual), these costs are due at closing as well.
• Legal fees: Delaware state law requires that an attorney oversee real estate transactions. Legal fees will be due at closing.

Lowering your closing costs in Delaware

While the amount of many expenses associated with closing are set by the government and not open for discussion, who pays for these closing costs may be negotiable. For example, Delaware transfer taxes and real estate commissions are both large expenses that can be shared between buyer and seller to some degree.

As a homebuyer, one way to try and lower your closing costs is to ask the seller to cover some of these costs, or share in them. This type of request is not unusual, and while sellers are not required to agree, they often do in service of keeping the deal moving.

First-time homebuyers can also look into local financial assistance programs designed to help with funding for closing or even down payment expenses. The Delaware State Housing Authority, for instance, offers a variety of programs aimed at making home purchases more affordable, including covering closing costs.

Find a local real estate agent

No matter which side of the real estate transaction you’re on, having a local real estate agent on your team can make the process far easier to navigate. If you’ve never worked with a Realtor before, reach out to friends and family for recommendations. And before settling on one agent, be sure to interview a few candidates to find the best person for the job. It’s also a good idea to research online reviews of an agent before making a final decision.

FAQs

• Does the seller pay closing costs in Delaware?

  Yes, both the home seller and the buyer pay some form of closing costs in every state. In Delaware, common closing costs for sellers include Realtor commissions, transfer taxes and attorney fees (the state is one of many that requires a lawyer to oversee real estate transactions).

• What is the most expensive part of closing costs?

  Realtor commissions are typically one of the most expensive parts of a real estate transaction — each agent involved will usually earn somewhere between 2.5 and 3 percent of the home’s sale price. In Delaware, transfer taxes are also expensive at about 4 percent of the sale price; this fee is often split between the buyer and the seller.