Closing costs in Missouri: Who pays for what?
Whether you’re buying a house or selling one, real estate transactions include a long list of fees. Chief among these are closing costs, the many expenses that both parties are responsible for paying in order to seal the deal. Closing costs can amount to thousands of dollars above and beyond a home’s price tag for buyers, and can eat into the sale proceeds that a seller walks away with.
In the Show-Me State, like many other states, closing costs include such expenses as title fees, property taxes and lender-related charges. Here’s what to know about closing costs in Missouri.
How much are closing costs in Missouri?
The final bill for closing costs varies by state, as well as by how expensive the home in question is. Missouri has one of the lowest closing-cost rates in the country, averaging just 0.8 percent of a home’s sale price (not including Realtor commissions), according to data from CoreLogic’s Closing Corp. In neighboring Illinois, by comparison, that rate is 2.1 percent.
Now let’s look at how much that amounts to on the typical Missouri home. The median home-sale price in the state as of September 2024 was $265,900, according to Redfin data. For a home at that price point, closing costs would total $2,127.
Of course, home prices vary throughout the state, and so too do closing costs. In St. Louis, for instance, the median home price was slightly lower at $226,500 — that would result in lower closing costs of $1,812. But in the suburb of Chesterfield, where homes are a much more expensive $490,000, they would go way up to $3,920.
Who pays closing costs in Missouri, buyers or sellers?
It’s important to remember that some amount of closing costs are paid by both the buyer and the seller, meaning the full amount is not the responsibility of just one party.
The most significant expense associated with closing is likely to be Realtor commissions. This expense typically amounts to 2.5 to 3 percent of a home’s final sale price, per agent — the seller will pay their own agent, and who pays the buyer’s agent will depend on the details of your specific deal. For a median-priced $265,900 Missouri home, 3 percent comes to $7,977. In addition, if either party chooses to hire a real estate attorney to represent their interests, the legal fees would be due at closing.
Here’s a more detailed breakdown of who typically pays for which costs in Missouri:
Common closing costs for buyers
A significant portion of the closing cost bill for homebuyers will be related to their mortgage lender. Here are some of the typical expenses a buyer can expect to pay:
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Lender fees: Mortgage lenders often charge a variety of fees throughout the underwriting process, including an application fee, a fee to pull your credit and another to originate the loan. If you decide to pay mortgage points to reduce your loan’s rate, that’s another fee associated with closing.
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Title expenses: There’s also a cost associated with the process of researching a home’s title to ensure there are no liens or encumbrances, as well as an insurance policy to cover the lender. In Missouri, buyers are often the ones footing this bill.
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Home appraisal: Your mortgage lender will also require that a home appraisal be conducted prior to closing. This is to confirm that the home is worth the amount of money you’re borrowing. This is likely to cost a few hundred dollars.
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Home inspection: Though it’s not a requirement for closing, getting the home professionally inspected is a wise move to ensure there are no unexpected or serious issues impacting the home. The cost of a home inspection will be another few hundred dollars — but if any issues are found, you may be able to use them as leverage in the negotiation process.
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Property taxes and insurance premiums: Many buyers are required to pay a certain amount of these ongoing fees upfront. If this is the case, the funds are held in escrow and disbursed as needed.
Common closing costs for sellers
On the other side of the equation, sellers’ closing costs include the expense associated with paying off any remaining mortgage balance, among other things.
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Transfer taxes: Good news for Missouri sellers: The state does not charge this common real estate tax. However, you may be required to pay a small fee to record the sale with the local government.
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Owner’s title insurance: In Missouri, the seller typically pays for the new owner’s title insurance policy.
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Property taxes and HOA fees: Sellers are responsible for paying their property taxes until the sale closes. The same holds true for any homeowners association dues or charges that may apply.
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Mortgage payoff: If there’s a remaining balance on your mortgage, this must be fully paid off as part of the closing process. This is very common and typically gets taken out of your sale proceeds and wired directly to the mortgage provider.
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Concessions: Seller concessions are also common, though less so in markets where inventory is limited and sellers have the upper hand. If you do agree to cover any of the buyer’s expenses, these costs will be due at closing.
Lowering your closing costs in Missouri
Many aspects of real estate deals are negotiable, and that includes closing costs. Your agent’s commission fee, for example, may be open to negotiation, and even a small discount can save a lot of money.
If you’re buying a house, it’s a good idea to research multiple mortgage lenders to find one who can offer you the most attractive rate and terms. Another way to defray closing expenses is through the use of government-sponsored assistance programs. These can be offered at the city, county and state level and can cover a portion of down-payment and closing-costs expenses for buyers who qualify. There are many such programs designed for first-time homebuyers in Missouri.
Find a local real estate agent
If you’re ready to buy or sell a home in Missouri, the process can be much easier with a local Realtor by your side. A local real estate agent who knows the market well can help you navigate the process more effectively, helping sellers fetch the best price and buyers find a home they can afford that meets their needs. Consider asking friends or family who have had a good experience for a recommendation, and be sure to research the Realtor’s online presence and reviews from past customers to make sure you find a reputable professional.
