Closing costs in Pennsylvania

If you are preparing to buy or sell a home in the Keystone State, it’s best to have some extra money set aside for closing costs. The expenses associated with finalizing a real estate transaction here — or in any state — can add up quickly. From mortgage-related fees to agent commissions and attorney bills, both sellers and buyers are on the hook for many different costs come closing time.

Here, we break down how much you can expect to pay in closing costs in Pennsylvania, no matter which side of the real estate transaction you’re on.

How much are closing costs in Pennsylvania?

Closing costs encompass a variety of real estate–related expenses. Some charges are property-related, such as appraisal and title fees; some are transaction-related, like municipality recording fees; and many are related to financing, such as mortgage origination and underwriting fees.

How much closing costs will amount to in Pennsylvania depends on a variety of factors, including the sale price of the home, the commission charged by the real estate agents, where in the state the property is located and more.

CoreLogic ClosingCorp data estimates the state’s average closing costs at 4.3 percent of a home’s final sale price — certainly on the high side compared to other states it borders, like New Jersey at 1.7 percent, and Ohio at 2 percent. If you take 4.3 percent of Pennsylvania’s median home sale price, which as of June 2023 was $298,600, according to Redfin data, the state’s typical closing costs would come to $12,840.

Who pays closing costs in Pennsylvania, buyers or sellers?

Buyers and sellers usually share the burden of closing costs, in Pennsylvania and all states, with certain items typically falling to one side or the other. Sellers commonly have their closing costs subtracted from the proceeds of the home sale.

“In Pennsylvania, both parties pay some of the closing costs,” says Christa Ross, a Realtor with RE/MAX Select in Pittsburgh. “For sellers, that primarily consists of real estate commissions, transfer taxes, deed preparation and some settlement fees. For buyers, closing costs are commonly made up of lender fees, title insurance, transfer taxes and settlement fees.”

It’s common in the state for the buyer and seller to split the cost of real estate transfer taxes. The allocation of some other closing costs can be negotiated before the contract is finalized, as well: For example, if the seller is eager to unload their property quickly or hasn’t had much interest from buyers, they may agree to pay for some of the buyer’s closing costs — often referred to as seller concessions. And if either party enlists the services of a real estate attorney, that cost will also be paid at closing.

Closing costs for buyers

Homebuyers in Pennsylvania are typically responsible for paying closing costs that can include the following fees:

• Loan origination: Many lenders charge a fee for initiating a mortgage loan, typically 0.5 to 1 percent of the loan amount.
• Credit report: They will also charge a small fee to run your credit, typically no more than $50.
• Recording: Some municipalities charge a fee to record the transaction. These are usually modest but may run up to a few hundred dollars in some places.
• Title search and insurance: A title search confirms that the property has no liens or other issues that could affect the transfer or ownership. Title insurance protects against claims on the title going forward.
• Appraisal and inspection: A professional appraisal will be required by the lender to confirm the home’s value; these typically cost between $300 and $500. The inspection, not required but highly recommended, will cost about the same.
• Mortgage points: Some buyers may choose to pay mortgage points upfront to lower the interest rate on their loan. The cost is typically 1 percent of the loan amount per point.
• Transfer taxes: In Pennsylvania, this tax to transfer ownership of property usually runs 1 percent of the sale price for state tax and another 1 percent for local tax. Local charges in certain areas can be much higher, though: “The city of Pittsburgh currently has a 5 percent transfer tax, for example,” Ross says.
• Property taxes and homeowners insurance: These are often prepaid for a set length of time, payable at closing.

Closing costs for sellers

Sellers have their own share of closing costs. Among them are:

• Real estate agent commissions: This is by far the greatest expense paid for by sellers: typically 5 to 6 percent of the home’s sale price. On a median-priced $298,600 Pennsylvania home, 6 percent comes to nearly $18,000.
• Transfer taxes: This cost might be split between the buyer and seller.
• Property taxes: These are typically prorated based on the time of year the property is sold and due at closing.
•  HOA fees: If the property is part of a homeowners association, prorated dues will also need to be paid.
• Seller concessions: If you agree to pay any portion of the buyer’s closing costs, that amount will also be due at closing.

Lowering your closing costs in Pennsylvania

There’s not a lot of wiggle room around most of the closing costs you will pay as a homebuyer or seller. Still, you may be able to pay less for certain items by following best practices and doing your homework.

Sellers should remember that their biggest cost, agent commissions, can be negotiated. A small discount can make a big difference, especially on higher-priced homes.

Buyers have more options for lowering their costs. “It’s advisable for buyers to shop around for a mortgage lender that offers competitive closing costs,” says Seth Diener, a private wealth manager for Diener Money Management in Newtown, Pennsylvania. “Additionally, consider mortgages like an FHA, USDA or VA loan, as they often have lower closing costs compared to conventional mortgage loans.”

Shane Whitteker, chief broker/owner of Principle Home Mortgage in State College, Pennsylvania, says buyers can also help keep costs down by improving their credit score before applying for a mortgage. “Borrowers with lower credit scores will pay more closing costs on average per transaction,” he says.

Find a local real estate agent

Working with an agent you trust makes any real estate transaction easier, whether you’re buying a home or selling. Find one who knows your specific corner of the Keystone State: Each local market is different, and a knowledgeable local agent can guide you through the process to a smooth closing. Search online, ask friends and family, walk or drive through the neighborhood taking note of “for sale” or “sold” signs in the area — and interview several candidates before deciding on the agent who’s right for you.

FAQs

• Does the seller pay closing costs in Pennsylvania?

  Yes. Both the seller and the buyer each pay their share of closing costs in Pennsylvania, as they do in all states. Often, sellers pay more in closing costs than buyers because they typically cover real estate commissions, which can run up to 6 percent of the final sale price.
  

• What is the most expensive part of closing costs?

  When it comes to closing costs, real estate agent commissions are typically the most expensive item there is. These fees, which are usually paid for by the seller, most often amount to between 5 and 6 percent of the home’s sale price. In Pennsylvania, real estate transfer taxes are also a pricey closing cost. These are typically at least 2 percent of the sale price, 1 percent to the state and 1 percent to the local municipality, but in some areas the local tax can be considerably higher.