CLOSING COSTS

Philadelphia Closing Costs: What Buyers and Sellers Need to Know

Buying or selling a home involves more than the purchase price. From transfer taxes and title fees to lender costs, recording fees, and prepaid expenses, closing costs can add thousands of dollars to a real estate transaction.

If you're buying or selling a home in Philadelphia or the Main Line, understanding these costs ahead of time can help you budget accurately and avoid surprises at closing.

As a local Philadelphia and Main Line real estate professional, Eric Feinberg helps buyers and sellers understand the costs associated with their transaction and prepare for closing.

What Are Closing Costs?

Closing costs are the fees and expenses associated with completing a real estate transaction. The exact amount depends on the property's location, purchase price, type of transaction, lender, and whether you're buying or selling.

Common closing costs can include:

• Realty transfer taxes

• Title insurance and title-related fees

• Lender and mortgage fees

• Recording fees

• Attorney fees

• Appraisal fees

• Home inspection fees

• Prepaid property taxes and insurance

• Escrow deposits

• Other settlement and administrative fees

Closing costs are separate from your down payment.

Philadelphia Closing Costs for Buyers

If you're purchasing a home in Philadelphia, your closing costs may include:

Philadelphia Realty Transfer Tax

Philadelphia currently has a combined Realty Transfer Tax of 4.578%, consisting of a 3.578% City tax and a 1% Pennsylvania Commonwealth tax. The tax is generally split between the buyer and seller, although the terms of the agreement can determine how it is allocated.

Title Insurance

Title insurance protects you and your lender against certain problems with the property's title. Costs vary depending on the purchase price, title company, and policy.

Lender and Mortgage Costs

If you're financing your purchase, you may have costs associated with:

• Loan origination

• Underwriting

• Credit report

• Appraisal

• Mortgage-related documentation

• Other lender services

Your lender should provide a Loan Estimate outlining expected loan-related costs.

Recording and Settlement Fees

There may also be fees associated with recording the deed and mortgage and completing the settlement process.

Prepaid Expenses and Escrow

Your closing statement may include prepaid or escrowed amounts for expenses such as:

• Property taxes

• Homeowners insurance

• Mortgage interest

The amount depends on your closing date and the property's tax and insurance schedule.

Philadelphia Closing Costs Example: $500,000 Home

Let's say you're purchasing a $500,000 home in Philadelphia.

The exact amount you'll pay depends on your loan, title company, property taxes, insurance, negotiated contract terms, and other factors.

For illustration, the total Philadelphia Realty Transfer Tax on a $500,000 transaction would be approximately $22,890. If the tax is split evenly between the buyer and seller, each party's share would be approximately $11,445. The actual allocation can vary based on the terms of the transaction.

Planning to buy in Philadelphia? Eric can help you understand what costs to expect before you make an offer.

Philadelphia Closing Costs for Sellers

Sellers have their own set of expenses when completing a real estate transaction.

Depending on the property and transaction, sellers may be responsible for:

Realty Transfer Tax

Philadelphia's current combined Realty Transfer Tax is 4.578%. It is generally divided between buyer and seller, although the contract can specify a different arrangement.

Real Estate Commission

Real estate compensation is a separate transaction expense and is determined by the agreements between the parties and their agents.

Attorney and Settlement Fees

Sellers may have attorney, settlement, title, or administrative expenses associated with completing the transaction.

Property Tax Adjustments

Property taxes may be prorated between the buyer and seller based on the closing date.

Mortgage Payoff

If you have an existing mortgage, the outstanding loan balance and applicable payoff fees will generally be paid from the proceeds of the sale.

Other Seller Expenses

Depending on the property, sellers may also encounter costs related to:

• Repairs negotiated during the transaction

• Municipal requirements

• Liens or outstanding balances

• Home warranties or negotiated buyer concessions

• Other settlement adjustments

What About Closing Costs on the Main Line?

Closing costs can vary significantly across the Main Line because municipalities have different local taxes, fees, and requirements.

A transaction in Media, Wayne, Ardmore, Bryn Mawr, Haverford, Havertown, Newtown Square, or West Chester may have different costs from a Philadelphia transaction.

That's why it's important to look at the specific property rather than relying on a generic closing-cost percentage.

If you're buying or selling on the Main Line, Eric can help you understand the costs associated with your specific transaction.

Talk to Eric About Your Main Line Move.

Buyer vs. Seller Closing Costs

BuyerSellerLender feesRealty transfer taxAppraisalReal estate commissionTitle insuranceMortgage payoffRecording feesAttorney/settlement feesPrepaid taxes & insuranceProperty tax adjustmentsEscrow depositsNegotiated repairs/concessionsBuyer's share of applicable transfer taxesSeller's share of applicable transfer taxes

The exact allocation of costs depends on the property, municipality, lender, and terms of the purchase agreement.

When Do You Pay Closing Costs?

Most closing costs are paid at closing or settlement, although some expenses may be paid earlier.

For buyers, your lender and title/settlement company will provide documents showing the estimated and final costs associated with the transaction.

For sellers, many expenses are deducted from the proceeds of the sale at settlement.

Your final closing statement will show the actual amounts due.

How Much Should I Budget for Closing Costs?

There is no single closing-cost percentage that applies to every Philadelphia or Main Line transaction.

Your total can depend on:

• Purchase price

• Location

• Mortgage type

• Down payment

• Lender

• Title insurance

• Property taxes

• Transfer taxes

• Closing date

• Negotiated buyer or seller concessions

• Municipal requirements

• Other transaction-specific expenses

The best way to estimate your costs is to get a transaction-specific estimate before closing.

Buying or Selling in Philadelphia or the Main Line?

Closing costs shouldn't come as a surprise.

Whether you're purchasing your first Philadelphia home, moving to the Main Line, or preparing to sell your current property, Eric Feinberg can help you understand the local market and prepare for the financial details of your transaction.

Ready to make a move?

Helpful Resources

• Buying Your First Home

• Mortgage Basics

• Market Updates

• Philadelphia & Main Line Communities