Who Pays Closing Costs in a Cash Sale: Buyer, Seller, and Split Items

In a cash real estate transaction, both sides pay closing costs, but the split is lopsided and predictable: the seller typically covers real estate agent commissions, transfer taxes, and the payoff of any existing mortgage or liens, while the buyer handles title insurance, the title search, recording fees, and any attorney they bring in. Escrow fees and prorated property taxes are usually divided between the two. Local custom and the purchase agreement can shift individual line items, so who pays closing costs in a cash sale ultimately comes down to what the contract says on top of the regional default.

Because no lender is involved, a cash closing skips origination charges, appraisal requirements, and mortgage insurance, which makes the total bill noticeably smaller than in a financed deal.

What the Seller Pays

The seller’s costs are built around two jobs: paying the people who helped sell the property, and delivering it free of financial claims.

Real Estate Agent Commissions

Commissions are usually the seller’s single largest closing expense. Following the National Association of Realtors settlement that took effect in August 2024, sellers negotiate a rate with their own listing agent, and that rate is no longer bundled with the buyer’s agent fee by default. A seller can still offer a concession to cover the buyer’s agent, but is not required to. Listing-agent commissions commonly fall in the 2.5 to 3 percent range, and when sellers do cover both sides, combined commissions have been trending closer to 5 percent rather than the older 5 to 6 percent.

Existing Mortgage Payoff

If the seller still owes money on the property, the remaining loan balance plus per-diem interest through the closing date comes out of sale proceeds. Lenders charge a fee, often around $30 or less, to issue the formal payoff statement the escrow agent needs. Some loans also carry a reconveyance or satisfaction fee to release the lien from the public record once the debt is paid.

Transfer Taxes

Most jurisdictions impose a transfer tax when real property changes hands, and the seller is usually the one who pays it. In a handful of areas the buyer shares or assumes the cost. Rates vary dramatically: roughly 16 states charge no state-level transfer tax at all, while others impose rates from 0.1 percent of the sale price up to 3 percent or more on high-value properties. Counties and municipalities can layer on their own charges, so the total depends entirely on where the property sits.

Outstanding Liens and Judgments

A seller must deliver marketable title, meaning the ownership record is clean enough that a reasonable buyer would accept it. Any unpaid liens, court judgments, or other claims against the property are paid off from the seller’s proceeds at closing before the buyer receives the deed.

What the Buyer Pays

A cash buyer’s costs are focused on verifying the property’s legal status and getting the new ownership on the public record.

Owner’s Title Insurance

In a financed purchase, the lender requires its own title policy. In a cash sale there is no lender, so the buyer decides whether to purchase an owner’s title insurance policy. This one-time premium protects against hidden problems such as forged documents, undisclosed heirs, or unpaid taxes from a previous owner, claims that can surface years after closing.1Consumer Financial Protection Bureau. What Is Owner’s Title Insurance? The cost generally falls between 0.5 and 1 percent of the purchase price, and the policy lasts as long as you or your heirs own the property. Skipping it saves money upfront but leaves you personally responsible for defending your ownership if a claim arises.

Title Search

Before a policy is issued, a title professional examines decades of public records to identify anything that could cloud ownership. Title search fees commonly run a few hundred dollars, though complex chains of title can cost more.

Municipal Lien Search

A standard title search only reviews documents recorded in the county’s land records. A municipal lien search goes further, contacting city and county departments to uncover obligations that never appear there, such as unpaid water or sewer bills, open building permits, and code-enforcement violations. These debts can follow the property to the new owner. The search itself typically costs under $100.

Recording Fees

Every deed must be filed with the county recorder’s office to become part of the public record. The buyer pays this fee, usually a flat charge or a base fee plus a per-page surcharge. Amounts vary by county but are generally modest compared to other closing costs.

Attorney Fees

Some states require an attorney to handle the closing; others leave it optional. When a buyer hires legal counsel to review the deed, purchase agreement, and title documents, the fee is the buyer’s responsibility. Charges for a straightforward closing vary widely by market and complexity.

Costs That Are Usually Split

Escrow or Settlement Agent Fee

A neutral third party manages documents and funds through closing. This fee is frequently split equally between buyer and seller, though the purchase agreement can allocate it differently. For a typical cash transaction, escrow fees generally range from $500 to $2,000 depending on the sale price and local pricing.

Prorated Property Taxes and HOA Dues

Property taxes and homeowner-association dues are divided based on the exact closing date so each party pays only for the days they actually own the property during the current billing period. If you close on September 15 and taxes are billed annually, the seller covers January 1 through September 14 and the buyer covers the rest. The same day-by-day math applies to prepaid HOA dues: if the seller already paid for a full quarter, the buyer credits the seller for the unused portion.

Costs a Cash Sale Avoids

Because there is no mortgage, several charges that dominate a financed closing simply do not appear. No origination fee, no appraisal requirement, no mortgage insurance, no lender’s title policy. That absence is the main reason the total closing bill in a cash deal runs lower than in an otherwise identical financed one, and it is also why the buyer’s side of the ledger ends up as short as it does.

Federal Reporting That Can Shift Costs

Most federal reporting duties in a cash closing fall on the settlement agent rather than on the buyer or seller directly. The person responsible for closing files Form 1099-S reporting the gross proceeds paid to the seller.2Internal Revenue Service. Instructions for Form 1099-S (Rev. December 2026) Proceeds From Real Estate Transactions3Internal Revenue Service. Form 8300 and Reporting Cash Payments of Over $10,0004Internal Revenue Service. IRS Form 8300 Reference Guide

One rule, however, puts money on the line for the buyer. Under FIRPTA, when the seller is a foreign person or entity, the buyer must withhold a portion of the purchase price and remit it to the IRS. The general withholding rate is 15 percent of the amount realized.5Internal Revenue Service. FIRPTA Withholding Two exceptions apply when the buyer intends to use the property as a personal residence:

If the buyer fails to withhold when required, the buyer becomes personally liable for the tax. Sellers who believe their actual tax liability is lower than the withheld amount can apply to the IRS for a withholding certificate to reduce it.

Confirming the Split on the Settlement Statement

Every closing cost, credit, and proration ends up on a single document. For cash transactions, where no lender is involved and no federal Closing Disclosure is required, the standard form is typically the ALTA Settlement Statement designed for cash deals.7American Land Title Association. ALTA Settlement Statements Some closings still use the older HUD-1 format, which organizes charges into numbered categories: title-related fees appear in the 1100 series, and government recording and transfer charges in the 1200 series.8Department of Housing and Urban Development. HUD-1 Settlement Statement Form

Whichever form your closing uses, the statement shows every dollar each party owes and receives. Reading it line by line before signing is the most reliable way to confirm that commissions, transfer taxes, title charges, recording fees, escrow fees, and prorations landed on the party your purchase agreement actually assigns them to.